<PAGE>
As filed with the Securities and Exchange Commission on February 3, 2000
Registration No. 333-91641
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
PRE-EFFECTIVE
AMENDMENT No. 1
to
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------
ChipPAC International Company Limited
ChipPAC, Inc.
ChipPAC Liquidity Management Hungary Limited Liability Company
ChipPAC Luxembourg S.a.R.L.
ChipPAC Korea Company Ltd.
ChipPAC Limited
ChipPAC (Barbados) Ltd.
(Exact name of registrants as specified in their charters)
British Virgin Islands 3674 66-0573152
California 3674 77-0463-48
Hungary 3674 98-0209814
Luxembourg 3674 98-0209817
Republic of Korea 3674 98-0209695
British Virgin Islands 3674 98-0209699
Barbados 3674 98-0209821
(State or other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Classification Code) Identification No.)
incorporation or
organization) --------------
3151 Coronado Drive, Santa Clara, California 95404
Telephone: (408) 486-5900
(Address, including zip code, and telephone number, including area code of
registrants' principal executive offices)
--------------
Dennis P. McKenna
President & Chief Executive Officer
ChipPAC, Inc.
--------------
3151 Coronado Drive, Santa Clara, California 95404
(408) 486-5900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------
Copies of all communications, including communications sent to agent for
service, should be sent to:
Eva Herbst Davis
Kirkland & Ellis
300 South Grand Avenue, Suite 3000
Los Angeles, California 90071
(213) 680-8400
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
--------------
If any of the securities being registered on this Form are being 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, please 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 this 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>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
ChipPAC International Company Limited
As in most United States jurisdictions, the board of directors of a British
Virgin Islands company is charged with the management and affairs of the
company, and subject to any limitations to the contrary in the Memorandum of
Association of a company, the Board of Directors is entrusted with the power to
manage the business and affairs of the company (hereinafter, the "Issuer"). In
most United States jurisdictions, directors owe a fiduciary duty to a company
and its shareholders, including a duty of care, pursuant to which directors
must properly apprise themselves of all reasonably available information, and a
duty of loyalty, pursuant to which they must protect the interests of the
company and refrain from conduct that injures the company or its shareholders
or that deprives the company or its shareholders of any profit or advantage.
Many United States jurisdictions have enacted various statutory provisions
which permit the monetary liability of directors to be eliminated or limited.
Under British Virgin Islands law, liability of a director or officer of a
company director is, for the most part, limited to cases of willful malfeasance
in the performance of duties or to cases where such director or officer, as
applicable, has not acted honestly, in good faith and with a view to the
company's best interests.
Under its Memorandum of Association, the Issuer is authorized to indemnify
any person who is made or threatened to be made a party to a legal or
administrative proceeding by virtue of being a director, officer or liquidator
of the Issuer, provided such person acted honestly and in good faith and with a
view to the best interests of the Issuer and, in the case of a criminal
proceeding, such person had no reasonable cause to believe that his conduct was
unlawful. The Issuer's Memorandum of Association also permits it to indemnify
any director, officer or liquidator of the Issuer who was successful in any
proceeding against expenses and judgments, fines and amounts paid in settlement
and reasonably incurred in connection with the proceeding, where such person
met the standard of conduct described in the preceding sentence. The Issuer has
provisions in its Memorandum of Association that insure or indemnify, to the
full extent allowed by the laws of the Territory of the British Virgin Islands,
directors, officers, employees, agents or persons serving in similar capacities
in other enterprises at the request of the Issuer. The Issuer may obtain a
directors' and officers' insurance policy.
ChipPAC, Inc.
ChipPAC, Inc. ("ChipPAC") is incorporated under the laws of the State of
California. Section 317 of the General Corporation Law of the State of
California provides that a California corporation may indemnify any person who
is, or is threatened to be made, party to any proceeding (other than an action
by or in the right of the corporation to procure a judgment in its favor) by
reason of the fact that the person is or was an agent of the corporation,
against expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with the proceeding if that person acted in
good faith and in a manner the person reasonably believed to be in the best
interests of the corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of the person was unlawful. A
corporation has power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that the person is or was an agent of the corporation,
against expenses actually and reasonably incurred by that person in connection
with the defense or settlement of the action if the person acted in good faith,
in a manner the person believed to be in the best interests of the corporation
and its shareholders.
Under Article V of ChipPAC's Amended and Restated By-Laws, ChipPAC will
indemnify any person who was or is a party, or is threatened to be made a
party, to any proceeding (other than an action by or in the right of this
corporation) by reason of the fact that such person is or was an agent of
ChipPAC, against expenses,
II-1
<PAGE>
judgments, fines, settlements or other amounts actually and reasonably incurred
in connection with such proceeding if that person acted in good faith and in a
manner that person reasonably believed to be in the best interests of ChipPAC
and, in the case of a criminal proceeding, if that person had no reasonable
cause to believe his conduct was unlawful. Such right of indemnification will
be a contract right and will not be exclusive of any other right which such
directors, officers or representatives may have or hereafter acquire under any
contract or otherwise. For purposes of the foregoing discussion, "agent" means
any person who is or was a director, officer, employee or other agent of
ChipPAC, or is or was serving at the request of ChipPAC as a director, officer,
employee, or agent of another foreign or domestic corporation, limited
liability company, partnership, joint venture, trust or other enterprise, or
was a director, officer, employee or agent of a foreign or domestic corporation
which was a predecessor corporation of ChipPAC or of another enterprise at the
request of such predecessor corporation
In addition, Section 204 of the General Corporation Law of the State of
California allows a corporation to eliminate the personal liability of a
director of a corporation to the corporation or to any of its stockholders for
monetary damages for a breach of fiduciary duty as a director, provided,
however, that:
(A) such a provision may not eliminate or limit the liability of
directors:
(1) for acts or omissions that involve intentional misconduct or a
knowing and culpable violation of law;
(2) for acts or omissions that a director believes to be contrary to
the best interests of the corporation or its shareholders or that
involve the absence of good faith on the part of the director;
(3) for any transaction from which a director derived an improper
personal benefit;
(4) for acts or omissions that show a reckless disregard for the
director's duty to the corporation or its shareholders in circumstances
in which the director was aware, or should have been aware, in the
ordinary course of performing a director's duties, of a risk of serious
injury to the corporation or its shareholders;
(5) for acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the
corporation or its shareholders;
(6) under Section 310; or
(7) under Section 316;
(B) no such provision will eliminate or limit the liability of a
director for any act or omission occurring prior to the date when the
provision becomes effective; and
(C) no such provision will eliminate or limit the liability of an
officer for any act or omission as an officer, notwithstanding that the
officer is also a director or that his or her actions, if negligent or
improper, have been ratified by the directors.
Article IV of ChipPAC's Amended and Restated Articles of Incorporation
includes a provision which eliminates directors' personal liability to the full
extent permitted under the General Corporation Law of the State of California.
ChipPAC maintains a policy of directors and officers liability insurance
covering certain liabilities incurred by its directors and officers in
connection with the performance of their duties.
ChipPAC (Barbados) Ltd.
Paragraph 10 of ChipPAC (Barbados) Ltd.'s ("ChipPAC Barbados") By-Laws
provides for the indemnification of its officers and directors (and such
persons' executors and administrators) against any and all judgments, fines,
amounts paid in settlement and reasonable expenses, including attorneys' fees,
incurred by such person in connection with any claim, action, suit or
proceeding, whether civil, criminal, administrative or investigative by reason
of the fact that such person is or was a director or officer of ChipPAC
Barbados, or is or
II-2
<PAGE>
was serving at the request of ChipPAC Barbados as a director or officer, of any
other corporation, partnership, joint venture, trust, enterprise or
organization, except with respect to any matter for which indemnification would
be void pursuant to the Companies Act, 1982 of Barbados (the "Companies Act").
Under the Companies Act, indemnification of the officers and directors of
ChipPAC Barbados against any liability which would attach by reason of any
contract entered into or act or thing done or omitted to be done by them in
performance of their office or in any way in the discharge of their duties, if
the same happens through their not acting in good faith and in the best
interest of ChipPAC Barbados is void.
ChipPAC Limited
As in most United States jurisdictions, the board of directors of a British
Virgin Islands company is charged with the management and affairs of the
company, and subject to any limitations to the contrary in the Memorandum of
Association of a company, its Board of Directors is entrusted with the power to
manage the company's business and affairs. In most United States jurisdictions,
directors owe a fiduciary duty to the company and its shareholders, including a
duty of care, pursuant to which directors must properly apprise themselves of
all reasonably available information, and a duty of loyalty, pursuant to which
they must protect the interests of the company and refrain from conduct that
injures the company or its shareholders or that deprives the company or its
shareholders of any profit or advantage. Many United States jurisdictions have
enacted various statutory provisions which permit the monetary liability of
directors to be eliminated or limited. Under British Virgin Islands law,
liability of a director or officer of a company is basically limited to cases
of willful malfeasance in the performance of his duties or to cases where the
director has not acted honestly and in good faith and with a view to the best
interests of the company.
Under its Memorandum of Association, ChipPAC Limited is authorized to
indemnify any person who is made or threatened to be made a party to a legal or
administrative proceeding by virtue of being a director, officer or liquidator
of ChipPAC Limited, provided such person acted honestly and in good faith and
with a view to the best interests of ChipPAC Limited and, in the case of a
criminal proceeding, such person had no reasonable cause to believe that his
conduct was unlawful. ChipPAC Limited's Memorandum of Association also permits
it to indemnify any director, officer or liquidator who was successful in any
proceeding against expenses and judgments, fines and amounts paid in settlement
and reasonably incurred in connection with the proceeding, where such person
met the standard of conduct described in the preceding sentence. ChipPAC
Limited has provisions in its Memorandum of Association that insure or
indemnify, to the full extent allowed by the laws of the Territory of the
British Virgin Islands, directors, officers, employees, agents or persons
serving in similar capacities in other enterprises at the request of ChipPAC
Limited. ChipPAC Limited may obtain a directors' and officers' insurance
policy.
ChipPAC Korea Company Ltd.
The Republic of Korea Commercial Act (the "Commercial Act") governs the
liability relationship between companies and their officers and directors in
both joint stock companies (chusik hoesa) and limited liability companies
(yuhan hoesa). Articles 399 and 400 of the Commercial Act describe the
circumstances in which officers and directors may be held liable to the
company, while Article 401 of the Commercial Act outlines the circumstances in
which officers and directors may be held liable to third parties. The latter
provides that third parties which are harmed by a wilful act or gross
negligence of an officer or director may have recourse against both the
applicable officer or director and the company. In the event that third parties
are harmed through the mere negligence of an officer or director, such third
party may only have recourse against the company. In the event the company
incurs damages as a result of the negligence of its directors and officers, it
may the seek indemnification from the negligent party.
The organizational documents of ChipPAC Korea Company Ltd. ("ChipPAC Korea")
are silent as to the issue of indemnification of officers and directors. In
addition, ChipPAC Korea, like many Korean companies, does not carry directors
and officers liability insurance.
II-3
<PAGE>
ChipPAC Luxembourg S.a.R.L.
Under Luxembourg law, civil liability of directors both to ChipPAC
Luxembourg S.a.R.L. ("ChipPAC Luxembourg") and to third parties is generally
considered to be a matter of public policy. It is possible that Luxembourg
courts would declare void an explicit or even implicit contractual limitation
on directors' liability to ChipPAC Luxembourg. ChipPAC Luxembourg, however,
can validly agree to indemnify its directors against the consequences of
liability actions brought by third parties (including shareholders if such
shareholders have personally suffered a damage which is independent of and
distinct from the damage caused to the company).
Under Luxembourg law, an employee of ChipPAC Luxembourg can only be liable
to ChipPAC Luxembourg for damages brought about by his or her willful acts or
gross negligence. Any arrangement providing for the indemnification of
officers against claims of ChipPAC Luxembourg would be contrary to public
policy. Employees are liable to third parties under general tort law and may
enter into arrangements with ChipPAC Luxembourg providing for indemnification
against third party claims.
Under Luxembourg law, an indemnification agreement can never cover a
willful act or gross negligence.
ChipPAC Luxembourg's Articles of Incorporation are silent as to the issue
of indemnification of its officers and directors.
ChipPAC Liquidity Management Hungary Limited Liability Company
The organizational documents of ChipPAC Liquidity Management Hungary
Limited Liability Company ("ChipPAC Hungary") are silent as to the issue of
indemnification of the managing director. ChipPAC Hungary has no other
officers or directors. Therefore, in the event any case arises which involves
the liability of a managing director, such case must be settled in accordance
with the applicable provisions of the Hungarian Companies Act (the "Companies
Act") and the Hungarian Civil Code (the "Civil Code").
Under the Companies Act, a managing director must conduct himself in
respect of the management of a company with "increased care," as opposed to
the standard of "general care" which is prescribed by the Civil Code. A
managing director may be held liable in the event of a culpable breach of any
provision of the Companies Act, a company's Deed of Foundation or any validly
enacted resolutions of the company's Founder. If the aforementioned duty of
care is breached, a managing director may be held liable under the rules of
the Civil Code for any damages to the company where such managing director's
actions were (i) in contravention of Hungarian law, (ii) caused damage to the
company and (iii) were not undertaken with the requisite degree of care
specified in the Companies Act.
Enforcement of liability claims against a managing director is in the sole
discretion of the Founder. A Founder may exercise his or her rights against a
managing director within one year of the company's deletion from the Company
Registry. A managing director is only obliged to compensate the company for
damages, and is not liable to third parties for acts that are within the scope
of his or her role or responsibility as a managing director. Third parties may
only seek damages from the company. Should the company be required to pay
damages to a third party for acts of the managing director, however, it may
have recourse against the managing director for damages incurred as a result
of third party claims.
II-4
<PAGE>
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Description
------- ----------- ---
<C> <S> <C>
2.1 Agreement and Plan of Recapitalization and Merger, dated as
of March 13, 1999, by and among Hyundai Electronics
Industries Co., Ltd., Hyundai Electronics America, ChipPAC,
Inc. and ChipPAC Merger Corp.*
2.2 First Amendment to Agreement and Plan of Recapitalization
and Merger, dated as of June 16, 1999 by and among Hyundai
Electronics Industries Co., Ltd., Hyundai Electronics
America, ChipPAC, Inc. and ChipPAC Merger Corp.*
2.3 Second Amendment to Agreement and Plan of Recapitalization
and Merger, dated as of August 5, 1999, by and among Hyundai
Electronics Industries Co., Ltd., Hyundai Electronics
America, ChipPAC, Inc. and ChipPAC Merger Corp.*
3.1 Amended and Restated Articles of Incorporation of ChipPAC,
Inc.*
3.2 Amended and Restated By-Laws of ChipPAC, Inc.*
3.3 Memorandum of Association of ChipPAC International Company
Limited (formerly known as ChipPAC Finance Limited).*
3.4 Articles of Association of ChipPAC International Company
Limited (formerly known as ChipPAC Finance Limited).*
3.5 Articles of Incorporation of ChipPAC (Barbados) Ltd.*
3.6 By-Law No. 1 of ChipPAC (Barbados) Ltd.*
3.7 Memorandum of Association of ChipPAC Limited.*
3.8 Articles of Association of ChipPAC Limited.*
3.9 Articles of Incorporation of ChipPAC Luxembourg S.a.R.L.*
3.10 Deed of Foundation of ChipPAC Liquidity Management Hungary
Limited Liability Company.*
3.11 Policy and Operating Guidelines of ChipPAC Liquidity
Management Hungary Limited Liability Company (abbreviated as
ChipPAC Ltd.)*
3.12 Articles of Incorporation of ChipPAC Korea Company Ltd.*
4.1 Purchase Agreement, dated as of July 22, 1999, by and among
ChipPAC International Limited, ChipPAC Merger Corp., Credit
Suisse First Boston Corporation and Donaldson, Lufkin &
Jenrette Securities Corporation (executed in counterpart on
August 5, 1999 by ChipPAC (Barbados) Ltd., ChipPAC Limited,
ChipPAC Korea Company Ltd., ChipPAC Luxembourg S.a.R.L. and
ChipPAC Liquidity Management Hungary Limited Liability
Company).*
4.2 Indenture, dated as of July 29, 1999, by and among ChipPAC
International Limited, ChipPAC Merger Corp. and Firstar Bank
of Minnesota, N.A., as trustee.*
4.3 First Supplemental Indenture, dated as of August 5, 1999, by
and among ChipPAC International Company Limited, ChipPAC,
Inc. and Firstar Bank of Minnesota, N.A., as trustee.*
4.4 12 3/4% Senior Subordinated Notes Due 2009.*
4.5 Form of Series B 12 3/4% Senior Subordinated Notes Due 2009.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- ----------- ---
<C> <S> <C>
4.6 Registration Rights Agreement, dated as of July 29, 1999,
by and among ChipPAC International Limited, ChipPAC Merger
Corp., and Credit Suisse First Boston Corporation and
Donaldson, Lufkin & Jenrette Securities Corporation, as
Initial Purchasers.*
5.1 Opinion of Kirkland & Ellis.*
8.1 Opinion of Kirkland & Ellis.*
10.1 Credit Agreement, dated as of August 5, 1999, by and among
ChipPAC International Company Limited, ChipPAC, Inc., the
Lenders listed therein and Credit Suisse First Boston, as
Administrative Agent, Sole Lead Manager and Collateral
Agent.*
10.2 Guaranty, dated as of August 5, 1999, by and among
ChipPAC, Inc. and certain subsidiaries of ChipPAC, Inc.,
in favor of Credit Suisse First Boston.*
10.3 Subsidiary Guaranty Agreement, dated as of August 5, 1999,
by and among ChipPAC Korea Company Ltd., ChipPAC Limited,
ChipPAC (Barbados) Ltd., ChipPAC Luxembourg S.a.R.L.,
ChipPAC Liquidity Management Hungary Limited Liability
Company and ChipPAC International Company Limited, in
favor of Firstar Bank of Minnesota, N.A.*
10.4 Amended and Restated Shareholders Agreement, dated as of
August 5, 1999, by and among ChipPAC, Inc. the Hyundai
Group (as defined therein), the Bain Group (as defined
therein), the SXI Group (as defined therein), Intel
Corporation, ChipPAC Equity Investors LLC, and Sankaty
High Yield Asset Partners, L.P.*
10.5 Amended and Restated Registration Agreement, dated as of
August 5, 1999, by and among ChipPAC, Inc., the Hyundai
Shareholders (as defined therein), the Bain Shareholders
(as defined therein), the SXI Shareholders (as defined
therein), Intel Corporation, ChipPAC Equity Investors LLC,
and Sankaty High Yield Asset Partners, L.P.*
10.6 Transition Services Agreement, dated as of August 5, 1999,
by and among Hyundai Electronics Industries Co., Ltd.,
Hyundai Electronics America, ChipPAC, Inc., ChipPAC Korea
Company Ltd., Hyundai Electronics Company (Shanghai) Ltd.,
ChipPAC Assembly and Test (Shanghai) Company Ltd., ChipPAC
Barbados Limited and ChipPAC Limited.*
10.7 Lease Agreement, dated as of June 30, 1998, by and between
Hyundai Electronics Industries Co., Ltd. and ChipPAC Korea
Ltd.*
10.7.1 Amendment Agreement, dated September 30, 1998, to Lease
Agreement, dated June 30, 1998, by and between Hyundai
Electronics Industries Co., Ltd. and ChipPAC Korea Ltd.*
10.7.2 Amendment Agreement 2, dated September 30, 1999, to Lease
Agreement, dated June 30, 1998, by and between Hyundai
Electronics Industries Co., Ltd. and ChipPAC Korea Ltd.*
10.8 Agreement Concerning Supply of Utilities, Use of Welfare
Facilities and Management Services for Real Estate, dated
as of June 30, 1998, by and between Hyundai Electronics
Industries Co., Ltd. and ChipPAC Korea Ltd.*
10.9 Service Agreement, dated as of August 5, 1999, by and
between Hyundai Electronics Industries Co. Ltd. and
ChipPAC Limited.+
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S> <C>
10.10 Sublease Agreement, dated as of May 1, 1998, by and between
Hyundai Electronics America and ChipPAC, Inc.*
10.11 Patent Sublicense Agreement, dated as of August 5, 1999, by
and between Hyundai Electronics Industries Co., Ltd. and
ChipPAC Limited.
10.12 TCC License Agreement, dated December 22, 1998, between
Tessera Inc., the Tessera Affiliates (as defined therein),
ChipPAC, Inc. and the Licensee Affiliates (as defined
therein).+
10.12.1 Letter Agreement, dated July 15, 1999, by and among ChipPAC,
Inc., Hyundai Electronics America, ChipPAC Limited and
Tessera, Inc.
10.13 Materials Agreement, dated as of July 1, 1999, by and
between ChipPAC Limited and Intel Corporation.+
10.14 Assembly Services Agreement, dated as of August 5, 1999, by
and between Intel Corporation and ChipPAC Limited.+
10.15 Stock Purchase Agreement, dated as of August 5, 1999, by and
between ChipPAC, Inc. and Intel Corporation.
10.16 Warrant to Purchase Class B Common Stock of ChipPAC, Inc.,
dated as of August 5, 1999, issued to Intel Corporation.
10.17 Advisory Agreement, dated as of August 5, 1999, by and among
ChipPAC, Inc., ChipPAC Limited, ChipPAC Operating Limited
and Bain Capital, Inc.*
10.18 Advisory Agreement, dated as of August 5, 1999, by and among
ChipPAC, Inc., ChipPAC Limited, ChipPAC Operating Limited
and SXI Group LLC.*
10.19 Employment Agreement, dated as of October 1, 1999, between
ChipPAC, Inc. and Dennis McKenna.
10.20 ChipPAC, Inc. 1999 Stock Purchase and Option Plan.*
10.21 Form of Key Employee Purchased Stock Agreement.*
10.22 Form of Key Employee Purchased Stock Agreement (with Loan).*
10.23 Form of Directors Tranche I Stock Option Agreement.*
10.24 Form of Employees Tranche I Stock Option Agreement.*
10.25 Form of Tranche II Stock Option Agreement.*
12.1 Statement Regarding Computation of Ratio of Earnings to
Fixed Charges.*
21.1 Subsidiaries of ChipPAC, Inc., ChipPAC International Company
Limited, ChipPAC (Barbados) Ltd., ChipPAC Limited, ChipPAC
Liquidity Management Limited Liability Company, ChipPAC
Luxembourg S.a.R.L. and ChipPAC Korea Company Ltd.*
23.1 Consent of PricewaterhouseCoopers LLP. *
23.2 Consent of Kirkland & Ellis (included in Exhibit 5.1).*
24.1 Powers of Attorney (included in Part II to the Registration
Statement).*
25.1 Statement of Eligibility on Form T-1 of Firstar Bank of
Minnesota, N.A., as trustee, under the Indenture.*
27.1 Financial Data Schedule.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Tender Instructions.*
</TABLE>
- --------
*Previously filed.
+Confidential treatment requested.
II-7
<PAGE>
(b) Financial Statement Schedules.
The following financial statement schedules for the three years ended
December 31, 1998 are included in this registration statement.
Schedule II--Valuation and Qualifying Accounts and Reserves--Allowance for
Doubtful Accounts
(in thousands)
<TABLE>
<CAPTION>
Additions charged
Year Ended Balance at to Costs and Deductions and Balance at End of
December 31 beginning of year Expenses Write-offs Period
- ----------- ----------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
1998.................... 375 787 -- 1,162
1997.................... 85 404 (114) 375
1996.................... 74 16 (5) 85
</TABLE>
Item 22. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrants pursuant to the provisions described under Item 20 or otherwise,
the registrants have been advised that in the opinion of the Securities and
Exchange Commission 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 the payment by
the registrants of expenses incurred or paid by a director, officer or
controlling person of the registrants 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, the registrants will,
unless in the opinion of their counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned registrants hereby undertake:
(1) 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 the registration statement when
it became effective.
(2) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
II-8
<PAGE>
(3) That, for the purpose of determining liability under the Securities
Act of 1933, each such post-effective amendment 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.
(4) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the exchange offer.
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, ChipPAC
International Company Limited has duly caused this Pre-Effective Amendment No.
1 to the Registration Statement on Form S-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in Tortola, British Virgin Islands, on
February 2, 2000.
ChipPAC International Company
Limited
/s/ Phang Guk Bing
By: _________________________________
(Peter) Phang Guk Bing
President, Chief Executive
Officer and Chief Financial
Officer
* * * *
Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment No. 1 to the Registration Statement on Form S-4 has been
signed by the following persons in the indicated capacities on February 2,
2000:
<TABLE>
<CAPTION>
Signatures Capacity
---------- --------
<C> <S>
/s/ Phang Guk Bing President, Chief Executive Officer, Chief
____________________________________ Financial Officer and Director
(Peter) Phang Guk Bing (Principal Executive, Financial and
Accounting Officer)
* Director
____________________________________
Curt Mason
* Director
____________________________________
Richard Parsons
* Director
____________________________________
P.J. Kim
Authorized Representative in
the
United States:
/s/ Dennis P. McKenna
____________________________________
Dennis P. McKenna
President and Chief Executive
Officer, ChipPAC, Inc.
</TABLE>
* The undersigned, by signing his name hereto, does hereby sign and execute
this Pre-Effective Amendment No. 1 to the Registration Statement on Form S-4 on
behalf of the above named officers and directors of ChipPAC International
Company Limited pursuant to the Power of Attorney executed by such officer
and/or director and previously filed with the SEC.
/s/ Dennis P. McKenna
By: ____________________________
Dennis P. McKenna
Attorney-in-Fact
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, ChipPAC, Inc.
has duly caused this Pre-Effective Amendment No. 1 to the Registration
Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Santa Clara, State of California, on February
2, 2000.
ChipPac, Inc.
/s/ Dennis P. McKenna
By: _________________________________
Dennis P. McKenna
President and Chief Executive
Officer
* * * *
Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment No. 1 to the Registration Statement on Form S-4 has been
signed by the following persons in the capacities indicated on February 2,
2000:
<TABLE>
<CAPTION>
Signatures Capacity
---------- --------
<S> <C>
/s/ Dennis P. McKenna President, Chief Executive
____________________________________ Officer and Director
Dennis P. McKenna (Principal Executive
Officer)
* Chief Financial Officer
____________________________________ (Principal Financial
Tony Lin Officer)
* Vice President of Finance
____________________________________ and Corporate Controller
Curt Mason (Principal Accounting
Officer)
* Director
____________________________________
David Dominik
* Director
____________________________________
Edward Conard
</TABLE>
II-11
<PAGE>
<TABLE>
<CAPTION>
Signatures Capacity
---------- --------
<S> <C>
* Director
____________________________________
Prescott Ashe
* Director
____________________________________
Michael A. Delaney
* Director
____________________________________
Paul C. Schorr IV
* Director
____________________________________
Joseph Martin
* Director
____________________________________
Chong Sup Park
</TABLE>
* The undersigned, by signing his name hereto, does hereby sign and execute
this Pre-Effective Amendment No. 1 to the Registration Statement on Form S-4 on
behalf of the above named officers and directors of ChipPAC, Inc. pursuant to
the Power of Attorney executed by such officer and/or director and previously
filed with the SEC.
/s/ Dennis P. McKenna
By______________________________
Dennis P. McKenna
Attorney-in-Fact
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, ChipPAC Korea
Company Ltd. has duly caused this Pre-Effective Amendment No. 1 to the
Registration Statement on Form S-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in Ichon-Shi, Kyungai-Do, Korea, on
February 2, 2000.
ChipPAC Korea Company Ltd.
/s/ Soo Nam Lee
By: _________________________________
Soo Nam Lee
President and Managing Director
* * * *
Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment No. 1 to the Registration Statement on Form S-4 has been
signed by the following persons in the indicated capacities on February 2,
2000:
<TABLE>
<CAPTION>
Signatures Capacity
---------- --------
<S> <C>
/s/ Soo Nam Lee Director, President and Managing Director
____________________________________ (Principal Executive Officer)
Soo Nam Lee
* Chief Financial Officer (Principal Financial
____________________________________ and Accounting Officer)
Dong Woo Lee
/s/ Dennis P. McKenna Director
____________________________________
Dennis P. McKenna
Authorized Representative in the United States:
/s/ Dennis P. McKenna
____________________________________
Dennis P. McKenna
President and Chief Executive
Officer, ChipPAC, Inc.
</TABLE>
* The undersigned, by signing his name hereto, does hereby sign and execute
this Pre-Effective Amendment No. 1 to the Registration Statement on Form S-4 on
behalf of the above named officers and directors of ChipPAC Korea Company Ltd.
pursuant to the Power of Attorney executed by such officer and/or director and
previously filed with the SEC.
/s/ Dennis P. McKenna
By______________________________
Dennis P. McKenna
Attorney-in-Fact
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the ChipPAC
(Barbados) Ltd. has duly caused this Pre-Effective Amendment No. 1 to the
Registration Statement on Form S-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in Barbados, West Indies, on February
2, 2000.
ChipPAC (Barbados) Ltd.
/s/ Phang Guk Bing
By: _________________________________
(Peter) Phang Guk Bing
President, Chief Executive Officer
and Chief Financial Officer
* * * *
Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment No. 1 to the Registration Statement on Form S-4 has been
signed by the following persons in the indicated capacities and on February 2,
2000.
<TABLE>
<CAPTION>
Signatures Capacity
---------- --------
<C> <S>
/s/ Phang Guk Bing President, Chief Executive Officer and
____________________________________ Chief Financial Officer (Principal
(Peter) Phang Guk Bing Executive,
Financial and Accounting Officer)
* Director
____________________________________
Eulalie Greenaway
* Director
____________________________________
Trevor Carmichael
* Director
____________________________________
</TABLE> Curt Mason
Authorized Representative in the United States
/s/ Dennis P. McKenna
- --------------------------------
Dennis P. McKenna
President and Chief Executive
Officer, ChipPAC, Inc.
* The undersigned, by signing his name hereto, does hereby sign and execute
this Pre-Effective Amendment No. 1 to the Registration Statement on Form S-4 on
behalf of the above named officers and directors of ChipPAC (Barbados) Ltd.
pursuant to the Power of Attorney executed by such officer and/or director and
previously filed with the SEC.
/s/ Dennis P. McKenna
By:_______________________
Dennis P. McKenna
Attorney-in-Fact
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, ChipPAC
Luxembourg S.a.R.L. has duly caused this Pre-Effective Amendment No. 1 to the
Registration Statement on Form S-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in Luxembourg, on February 2, 2000.
ChipPAC Luxembourg S.a.R.L.
/s/ Michele Musty
By: _________________________________
Michele Musty
Corporate Manager
* * * *
Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment No. 1 to the Registration Statement on Form S-4 has been
signed by the following persons in the indicated capacities and on February 2,
2000:
<TABLE>
<CAPTION>
Signatures Capacity
---------- --------
<C> <S>
/s/ Michele Musty Corporate Manager
____________________________________ (Co-Principal Executive, Financial and Accounting Officer
Michele Musty and Director)
/s/ Eric Vanderkerken Corporate Manager
____________________________________ (Co-Principal Executive, Financial and Accounting Officer
Eric Vanderkerken and Director)
* Corporate Manager
____________________________________ (Co-Principal Executive, Financial and Accounting Officer
ChipPAC International Company and Director)
Limited by: (Peter) Phang Guk Bing
President and Chief Executive
Officer
</TABLE>
Authorized Representative in the United States:
/s/ Dennis P. McKenna
- --------------------------------
Dennis P. McKenna
President and Chief Executive
Officer, ChipPAC, Inc.
* The undersigned, by signing his name hereto, does hereby sign and execute
this Pre-Effective Amendment No. 1 to the Registration Statement on Form S-4 on
behalf of the above named officers and directors of ChipPAC Luxembourg S.a.R.L.
pursuant to the Power of Attorney executed by such officer and/or director and
previously filed with the SEC.
/s/ Dennis P. McKenna
By:_______________________
Dennis P. McKenna
Attorney-in-Fact
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, ChipPAC
Liquidity Management Hungary Limited Liability Company has duly caused this
Pre-Effective Amendment No. 1 to the Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in
Budapest, Hungary on February 2, 2000.
ChipPAC Liquidity Management Hungary
Limited Liability Company
/s/ Jozsef Veress
By: _________________________________
Jozsef Veress
Managing Director
* * * *
Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment No. 1 to the Registration Statement on Form S-4 has been
signed by the following persons in the indicated capacities on February 2,
2000:
<TABLE>
<CAPTION>
Signatures Capacity
---------- --------
<C> <S>
/s/ Jozsef Veress Managing Director (Principal Executive,
____________________________________ Financial and Accounting Officer
Jozsef Veress and Sole Director)
Authorized Representative in the United States:
/s/ Dennis P. McKenna
____________________________________
Dennis P. McKenna
President and Chief Executive
Officer, ChipPAC, Inc.
</TABLE>
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, ChipPAC Limited
has duly caused this Pre-Effective Amendment No. 1 to the Registration
Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto
duly authorized, in Tortola, British Virgin Islands, on February 2, 2000.
ChipPAC Limited
/s/ Phang Guk Bing
By: _________________________________
(Peter) Phang Guk Bing
President, Chief Executive
Officer and Chief Financial
Officer
* * * *
Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment No. 1 to the Registration Statement on Form S-4 has been
signed by the following persons in the indicated capacities on February 2,
2000:
<TABLE>
<CAPTION>
Signatures Capacity
---------- --------
<C> <S>
/s/ Phang Guk Bing President, Chief Executive
____________________________________ Officer, Chief Financial
(Peter) Phang Guk Bing Officer and
Director
(Principal Executive, Financial
and Accounting Officer)
* Director
____________________________________
Curt Mason
* Director
____________________________________
P.J. Kim
* Director
____________________________________
Richard Parsons
Authorized Representative in the United States:
/s/ Dennis P. McKenna
____________________________________
Dennis P. McKenna
President and Chief Executive
Officer, ChipPAC, Inc.
</TABLE>
* The undersigned, by signing his name hereto, does hereby sign and execute
this Pre-Effective Amendment No. 1 to the Registration Statement on Form S-4 on
behalf of the above named officers and directors of ChipPAC Limited pursuant to
the Power of Attorney executed by such officer and/or director and previously
filed with the SEC.
/s/ Dennis P. McKenna
By:_______________________
Dennis P. McKenna
Attorney-in-Fact
II-17
<PAGE>
Exhibit 4.5
FORM OF EXCHANGE NOTE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
<PAGE>
2
No. $150,000,000
CUSIP NO.:
ISIN NO.:
12 3/4% Series B Senior Subordinated Notes Due 2009
ChipPAC International Company Limited, a British Virgin Islands
corporation, promises to pay to CEDE & CO., or registered assigns, the principal
sum of ONE HUNDRED AND FIFTY MILLION UNITED STATES DOLLARS on August 1, 2009.
Interest Payment Dates: August 1 and February 1.
Record Dates: July 15 and January 15.
Additional provisions of this Security are set forth on the other side
of this Security.
Dated:
CHIPPAC INTERNATIONAL COMPANY LIMITED,
by
_________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
FIRSTAR BANK OF MINNESOTA, N.A.
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
by
_____________________________
Authorized Signatory
<PAGE>
3
12 3/4% Series B Senior Subordinated Note Due 2009
1. Interest
--------
ChipPAC International Company Limited, a British Virgin Islands
corporation (such corporation, and its successors and assigns under the
Indenture hereinafter referred to, being herein called the "Issuer"), promises
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Issuer will pay interest semiannually on August 1 and February
1 of each year. Interest on the Securities will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from July 29,
1999. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Issuer shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
-----------------
The Issuer will pay interest on the Securities to the Persons who are
registered holders of Securities at the close of business on the July 15 or
January 15 next preceding the interest payment date even if Securities are
canceled after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Issuer will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. Payments in respect of the Securities represented by a Global
Security (including principal, premium and interest) will be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Issuer will make all payments in respect of a
certificated Security (including principal, premium and interest) by mailing a
check to the registered address of each Holder thereof; provided, however, that
-------- -------
payments on a certificated Security will be made by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the
<PAGE>
4
relevant due date for payment (or such other date as the Trustee may accept in
its discretion).
3. Paying Agent and Registrar
--------------------------
Initially, Firstar Bank of Minnesota, N.A., a Delaware banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The Issuer
may appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Issuer or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
---------
The Issuer issued the Securities under an Indenture dated as of July
29, 1999 (as supplemented by a First Supplemental Indenture, dated as of August
5, 1999, the "Indenture"), among the Issuer, the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
------
(S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms. The Issuer's obligations under the Securities are guaranteed by the
Company and each of the Subsidiary Guarantors.
The Securities are general unsecured obligations of the Issuer. The
Issuer shall be entitled, subject to its compliance with Section 4.03 of the
Indenture, to issue Additional Securities pursuant to Section 2.13 of the
Indenture. The Securities issued under the indenture will be treated as a single
class for all purposes under the Indenture. The Indenture limits, among other
things (i) the incurrence of additional debt by the Company and its Restricted
Subsidiaries, (ii) the payment of dividends on capital stock of the Company and
the purchase, redemption or retirement of capital stock or subordinated
indebtedness, (iii) certain transactions with affiliates, (iv) sales of assets,
including capital stock of subsidiaries, and (v) certain consolidations, mergers
and transfers of assets. The Indenture also prohibits certain restrictions on
distributions from subsidiaries. All of these limitations and prohibitions,
however, are subject to a number of important qualifications contained in the
Indenture.
<PAGE>
5
5. Optional Redemption
-------------------
Except as set forth in the next paragraph of this Section 5, the
Securities may not be redeemed prior to August 1, 2004. On and after that date,
the Issuer may redeem the Securities in whole at any time or in part from time
to time at the following redemption prices (expressed in percentages of
principal amount), plus accrued interest to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the related interest payment date):
if redeemed during the 12-month period beginning August 1,
Period Percentage
------ ----------
2004.......................................... 106.375%
2005.......................................... 104.250
2006.......................................... 102.125
2007 and thereafter........................... 100.000%
In addition, at any time prior to August 1, 2002, the Issuer may at
its option on one or more occasions redeem up to 35% of the aggregate principal
amount of Securities with the proceeds of one or more Equity Offerings, at any
time or from time to time, at a redemption price (expressed as a percentage of
principal amount) of 112 3/4% of the principal amount thereof, plus accrued
interest to redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the related interest payment
date); provided, however, that:
-------- -------
(1) at least 65% of such aggregate principal amount of Securities
(which includes Additional Securities, if any) remains outstanding
immediately after the occurrence of each such redemption (other than the
Securities held, directly or indirectly, by the Issuer or its Affiliates);
and
(2) each such redemption occurs within 60 days after the date of the
related Equity Offering.
The Securities may be redeemed, at the option of the Issuer, at any
time as a whole but not in part, on not less than 30 nor more than 60 days'
notice, at 100% of the principal amount thereof, plus accrued and unpaid
interest (if any) to the date of redemption (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date), in the event the Issuer has become or would become
obligated to
<PAGE>
6
pay, on the next date on which any amount would be payable with respect to the
Securities, any Additional Amounts as a result of a change in or an amendment to
the laws (including any regulations promulgated thereunder) of the British
Virgin Islands (or any political subdivision or taxing authority thereof or
therein), or any change in or amendment to any official position regarding the
application or interpretation of such laws or regulations, which change or
amendment is announced or becomes effective on or after the Issue Date;
provided, however, that (i) no such notice of redemption may be given earlier
- -------- -------
than 60 days prior to the earliest date on which Additional Amounts are due and
payable in respect of the Notes and (ii) at the time any such redemption notice
is given, such obligation to pay Additional Amounts remains in effect. Prior to
giving any notice of redemption pursuant to this provision, the Issuer will
deliver to the applicable Trustee (i) an Officers' Certificate stating that it
is entitled to effect such redemption and setting forth a statement of facts
showing that the conditions precedent to its right to so redeem have occurred
and (ii) an Opinion of Counsel in the British Virgin Islands to the effect that
the Issuer has or will become obligated to pay Additional Amounts as a result of
such amendment or change.
In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee, on a pro rata basis, by lot or by such
--- ----
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Security of U.S. $1,000 in original principal amount or
less shall be redeemed in part. If any Security is to be redeemed in part only,
the notice of redemption relating to such Security shall state the portion of
the principal amount thereof to be redeemed. A new Security in principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security.
6. Notice of Redemption
--------------------
Notice of optional redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied,
<PAGE>
7
on and after such date interest ceases to accrue on such Securities (or such
portions thereof) called for redemption.
7. Put Provisions
--------------
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions, to cause the Issuer to repurchase all or
any part of the Securities of such Holder at a repurchase price equal to 101% of
the principal amount of the Securities to be repurchased plus accrued interest
to the date of repurchase (subject to the right of holders of record on the
relevant record date to receive interest due on the related interest payment
date) as provided in, and subject to the terms of, the Indenture.
8. Subordination
-------------
The Securities are subordinated to Senior Indebtedness, as defined in
the Indenture. To the extent provided in the Indenture, Senior Indebtedness must
be paid before the Securities may be paid. The Issuer agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer of or exchange any Securities selected
for redemption (except, in the case of a Security to be redeemed in part, the
portion of the Security not to be redeemed) or any Securities for a period of 15
days before a selection of Securities to be redeemed or 15 days before an
interest payment date.
10. Persons Deemed Owners
---------------------
The registered Holder of this Security may be treated as the owner of
it for all purposes.
<PAGE>
8
11. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Issuer at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Issuer and not to the Trustee for payment.
12. Discharge and Defeasance
------------------------
Subject to certain conditions, the Issuer at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Issuer deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Issuer and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add guarantees with respect to the Securities or to secure the Securities,
or to add additional covenants or surrender rights and powers conferred on the
Issuer, or to comply with any request of the SEC in connection with qualifying
the Indenture under the Act, or to make any change that does not adversely
affect the rights of any Securityholder.
14. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
on the Securities at maturity, upon redemption pursuant to para graph 5 of the
Securities, upon acceleration or otherwise,
<PAGE>
9
or failure by the Issuer to redeem or purchase Securities when required; (iii)
failure by the Issuer and the Company to comply with other agreements in the
Indenture or the Securities, in certain cases subject to notice and lapse of
time; (iv) certain accelerations (including failure to pay within any grace
period after final maturity) of other Indebtedness of the Issuer if the amount
accelerated (or so unpaid) exceeds $10.0 million; (v) certain events of
bankruptcy or insolvency with respect to the Company and its Significant
Subsidiaries; (vi) certain judgments or decrees for the payment of money in
excess of $10.0 million; and (vii) failure of the Company Guaranty or any
Subsidiary Guaranty to be in full force and effect, or the failure of the
Company or a Significant Subsidiary that is a Subsidiary Guarantor to honor its
obligations under the Company Guaranty or its Subsidiary Guaranty, as the case
may be. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
with hold from Securityholders notice of any continuing Default (except a
Default in payment of principal or interest) if it determines that withholding
notice is in the interest of the Holders.
15. Trustee Dealings with the Issuer
--------------------------------
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Issuer or its Affiliates and may otherwise deal with the Issuer or
its Affiliates with the same rights it would have if it were not Trustee.
<PAGE>
10
16. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the Issuer
or the Trustee shall not have any liability for any obligations of the Issuer
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
17. Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. Holders' Compliance with Registration Rights Agreement.
------------------------------------------------------
Each Holder of a Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement, including,
without limitation, the obligations of the Holders with respect to a
registration and the indemnification of the Issuer to the extent provided
therein.
20. Governing Law.
--------------
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Issuer will furnish to any Securityholder upon written request and
without charge to the Security holder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
<PAGE>
11
CHIPPAC INTERNATIONAL COMPANY
LIMITED
c/o CHIPPAC, INC.
3151 CORONADO DRIVE
SANTA CLARA, CA 95054
<PAGE>
12
________________________________________________________________________________
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Issuer. The agent may substitute another to act
for him.
________________________________________________________________________________
Date: ________________ Your Signature:__________________________________________
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
_________________________
Signature
Signature Guarantee:
____________________________ _________________________
Signature must be guaranteed Signature
<PAGE>
13
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase) Custodian
</TABLE>
<PAGE>
14
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuer
pursuant to Section 4.06 or 4.09 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security purchased by
the Issuer pursuant to Section 4.06 or 4.09 of the Indenture, state the amount
in principal amount: $
Date: _______________ Your Signature: _________________________________
(Sign exactly as your name
appears on the other side of this
Security.)
Signature Guarantee: __________________________________________________________
(Signature must be guaranteed)
<PAGE>
EXHIBIT 10.9
Service Agreement
THIS AGREEMENT entered into this 5th day of August, 1999 by and between Hyundai
Electronics Industries Co. Ltd. ("HEI") having its principal office at San 136-
1, Ami-ri Bubal-cup, Ichon-si, Kyungki-do and ChipPAC Limited (""ChipPAC BVI")
having its principal office at the same address of HEI;
WHEREAS, HEI desires to appoint ChipPAC BVI as its provider of assembly services
for uBGA packages for RDRAM and [redacted*] which HEI will ramp up production
from 1999;
WHEREAS, ChipPAC BVI desires to provide HEI with uBGA packaging services for
RDRAM and [redacted*];
The parties hereto, having consulted, agree to the following.
Article 1 Purposes
The purpose of the Agreement is to provide for the details necessary for
HEI to provide the Chips and for ChipPAC BVI to provide HEI with its uBGA
packaging service to the Chips provided.
Article 2 Packaging Service Equipment
ChipPAC BVI will invest the capital expenditures to meet HEI's ramp up
schedule, up to a maximum capacity of [redacted*] RDRAM equivalent units
per month, subject to HEI's approval. The equipment acquired to provide HEI
with [redacted*] RDRAM equivalent units ("the Equipment") will be dedicated
to HEI use.
Article 3 Products
The semiconductor products ("Products") needed to ChipPAC BVI's packaging
service under this Agreement shall be listed in Appendix I and the list is
subject to addition or deletion in accordance with mutual agreement.
Article 4 Order and Purchase of the Products by HEI
4.1 HEI will ramp up production in 1999 and provide a ramp up schedule
for 2999 to ChipPAC BVI, which is estimated to be about [redacted*],
of which [redacted*] units are expected to be [redacted*] and
[redacted*] in units are to be [redacted*].
*Confidential treatment requested.
<PAGE>
4.2 HEI commits to purchase [redacted*] RDRAM equivalent uBGA packages
per month from [redacted*].
4.3 If HEI does not purchase the number of RDRAM equivalent uBGA packages
for which ChipPAC BVI has made a capacity commitment to provide
exclusively to HEI in any one month period between [redacted*], HEI
shall reimburse ChipPAC BVI for the depreciation for unused capacity
which had been committed by ChipPAC BVI. The depreciation period for
the Equipment will be [redacted*] and the calculation of depreciation
or the Equipment will be made using straight line depreciation with
no residual value. Any charge for unabsorbed depreciation will be
reduced by capacity used for other ChipPAC BVI customers. ChipPAC BVI
will use its best efforts to find customers to utilize such unused
capacity.
4.4 The production schedule and purchasing volume commitment time
prescribed in Article 4.1, 4.2 and 4.3 may be changed depending upon
the introduction schedule of Intel's RDRAM and, in such event, the
term and other timing parameters of this agreement shall be revised
accordingly.
4.5 HEI will send ChipPAC BVI a written notice containing HEI's planed
packaging contract amount for the next three months by 15 days prior
to the end of each month.
4.6 ChipPAC BVI shall notify HEI of acceptance of a order within seven
(7) days from the date of HEI's written order. No response from
ChipPAC BVI with respect to such order without any special reasons
hall be regarded as acceptance of an order.
4.7 HEI shall provide ChipPAC BVI with a rolling 6 month unit forecast.
These forecasts will be subject to the following limits of accuracy:
Forecast within one month: +/- 10%
Forecast within two months: +/- 25%
Forecast within three months: +/- 50%
HEI will be financially responsible for inventory and purchase
commitments for unique
*Confidential treatment requested.
2
<PAGE>
material made by ChipPAC BVI ordered on the basis of these forecasts,
provided that such financial compensation will be limited to the
amount of the Products which were produced for recent 45 days out of
the amount of the Product committed to be purchased by HEI under this
Agreement.
Article 5 Purchase Price
5.1 The committed prices at which HEI will purchase under this Agreement
are as follows:
a. 1999: [redacted*]
b. 2000: [redacted*]
c. 2001: [redacted*]
d. 2002: [redacted*]
The unit prices of all RDRAM will be set on the basis of [redacted*]
balls per unit.
5.2 The purchase price shall be determined by the mutual agreement
between HEI and ChipPAC BVI considering the market circumstances by
fifteen (15) days prior to the date when the relevant year commences
and the determined purchase price will be applied through the year
concerned.
5.3 Should no agreement be reached on the purchase price an independent
accounting firm will be appointed by the consultation of HEI and
ChipPAC BVI to determine the purchase price and either party shall
not raise objection to the result thereof.
Article 6 Supply of Chip
6.1 In case of acceptance of order by ChipPAC BVI, HEI shall provide
ChipPAC BVI with Chips required for the packaging of relevant
Products according to the definite order amount.
6.2 Chips, provided by HEI under Article 6.1 shall be transported by HEI
or HEI's designated forwarding
* Confidential treatment requested.
3
<PAGE>
agent to ChipPAC BVI's plant on HEI's own responsibility and at its
own costs thereof.
6.3 ChipPAC BVI's inspection of Chips provided by HEI shall be pursuant
to Appendix II "Chip Inspection Specification" agreed to by HEI and
ChipPAC BVI in advance. ChipPAC BVI shall notify HEI of the
inspection result within five (5) days from the date of provision of
Chips by HEI. Failure to notify during the given period shall be
deemed as acceptance by ChipPAC BVI and ChipPAC BVI shall no longer
be entitled to claim for defectiveness of Chips.
6.4 ChipPAC BVI, in principle, shall procure on its own all raw and
subsidiary materials that are required for packaging, other than
Chips provided by HEI. Nonetheless, HEI may be entitled to
instruct ChipPAC BVI to use certain materials or to provide some
materials to ChipPAC BVI.
Article 7 Packaging Process
Process for packaging service which ChipPAC BVI shall provide to HEI under
the Agreement shall be pursuant to Appending III "Process Baseline
Specification and other related Specification," agreed to by HEI and
ChipPAC BVI in advance.
Article 8 Required Date and Delivery
8.1 ChipPAC BVI shall deliver finished Products to HEI within [redacted*]
in 1999 and within [redacted*] thereafter from the date of the
provision of Chips (and Schedule) by HEI provided that the said
period can be changed upon mutual consent of both parties.
8.2 Packaging methods for Products shall be pursuant to Appendix IV
"Packaging Specification."
8.3 Products, provided to HEI by ChipPAC BVI under Article 8.1, shall be
forwarded to HEI plants or warehouses which HEI designates by ChipPAC
BVI or ChipPAC BVI's designated forwarding agents on ChipPAC BVI's
own responsibility and at its own costs thereof.
*Confidential treatment requested.
4
<PAGE>
8.4 The waste materials produced during the packaging process shall be
provided to HEI.
8.5 the status of the production of the Products and the information on
the quality of the Products shall be provided to HEI from time to
time by ChipPAC BVI.
Article 9 Inspection
9.1 HEI' inspection of Products provided by ChipPAC BVI shall be
pursuant to Appendix V : Semiconductor Inspection Specification,"
agreed to by HEI and ChipPAC BVI in advance.
9.2 HEI shall send ChipPAC BVI a written notice stating the inspection
result conducted as prescribed in the Article 9.1 within five (5)
days from the date of delivery of Products. No notice within the
given period shall be deemed as acceptance by HEI of the provided
Products.
Article 10 Payment
10.1 ChipPAC BVI shall deliver to HEI invoices for the products supplied
during the relevant month after completing the provision of Product
to HEI in accordance with the Agreement within five (5) days from
the end of such month. In case that HEI does not raise any objection
to such invoice, HEI shall pay ChipPAC BVI the amount within five (5)
days from the receipt of such invoice.
10.2 In the event that HEI has opened a letter of credit in consideration
of selling to its customers the Products which has been provided by
ChipPAC BVI to HEI, HEI shall, open a domestic letter of credit in
favor of ChipPAC BVI by the payment date as set forth in Article
10.1. HEI shall pay cash in US dollar currency or issue a check to
ChipPAC BVI for the amount not paid by such domestic letter of
credit.
10.3 [redacted*]
*Confidential treatment requested.
5
<PAGE>
10.4 All payments to be made pursuant to this agreement shall be made in
US dollar currency.
Article 11 Compensation to HEI for damages
11.1 In the event the provision of the Products are not completed within
the time agreed between the Parties, which is attributable to ChipPAC
BVI's responsibility, ChipPAC BVI shall pay to HEI the liquidated
damage per one day of delay equal to [redacted*] of the die cost plus
assembly cost of the Products.
11.3 In the event any Product provided to HEI by ChipPAC BVI shall not
satisfy the target yield rate for each period set forth below, which
is attributable to ChipPAC BVI's responsibility, ChipPAC BVI shall
pay to HEI the cost to manufacture the Chips used in the Products
which did not satisfy the yield rate below.
a. [redacted*] within the first quarter from the first ordered date;
b. [redacted*] within the second quarter from the end of first
quarter;
c. [redacted*] in the event that the number of the product ChipPAC
BVI provides is [redacted*] or more per month;
d. [redacted*] in the event that the number of the product ChipPAC
BVI provides is [redacted*] or more month;
Even in the first or second quarter from the first ordered date, if the
number of the product ChipPAC BVI provides is [redacted*] or more per month
or [redacted*] or more per month, the target yield rate of [redacted*] will
be applicable respectively.
Article 12. Term
This Agreement shall be effective upon execution and remain in effect until
June 30, 2002 and it can be renewed by mutual agreement of both parties.
* Confidential treatment requested.
6
<PAGE>
Article 13. Termination
13.1 This Agreement can be terminated with just causes by either party and
either Party who intends to terminate this Agreement shall give a
written notice to the other Party describing the details on the
breach of the Agreement which, for HEI, shall be limited to
deficiencies in quality, delivery, yield or competitive price.
13.2 Either Party in default will have 30 days (hereinafter the
"correction period") to put forth corrective action plan from the
date of receipt of above notice. Unless the breach of either Party in
default is corrected with the correction period or the extended
correction period set forth below, the other Party can cancel this
Agreement by providing 90 days written notice. Provided that ChipPAC
BVI may ask HEI additional period to correct its breach of contract
within above period and such correction period can be extended
("extended correction period") subject to HEI's consent not to be
unreasonably withheld.
13.3 If this Agreement is terminated in accordance with Article 13,
[redacted*].
13.4 After the transferor ownership of the Equipment to HEI in accordance
with Article 13.2 and 13.3, HEI will permit the ChipPAC BVI to use
the Equipment to provide the product with other customers until new
equipment necessary to provide the ordered products by its customers
are installed in ChipPAC BVI. In any case, the period for HEI to
permit ChipPAC BVI to use the Equipment will not exceed [redacted*].
Article 14 Audit on charges for unutilized capacity and materials
Charges from ChipPAC BVI for [redacted*] and for excess/obsolete material
purchased for HEI production will be subject to audit by a mutually agreed
external auditor.
*Confidential treatment requested.
7
<PAGE>
Article 15 Strategic Relations
Both parties agree to form strategic relationship to develop next
generation memory package in which ChipPAC BVI will support future volume.
Article 16 Confidentiality
16.1 Both parties agree that the contents of this Agreement and certain
information that each party may supply to the other in the course of
this Agreement are confidential. Except when it is required for a
financial audit, or for obtaining financing, or when its disclosure
is legally required, such as a United States SEC registration
statement, such confidential information shall not be disclosed to
third parties without the written consent of the other party. Both
parties will ensure that information obtained in the course of this
Agreement will be used only for fulfilling this Agreement, and that
any employees, consultants, advisors, and financial institutions
which receive such information are bound by this Article.
16.2 The obligation for Article 16.1 shall exist during one (1) year after
the expiation or termination of the Agreement.
Article 17 Force Majeure
Each party shall not be responsible for failure to perform hereunder due
to acts of God, national emergency situations, road or port blockades,
strikes, wars, internal tumult, or force majeure; provided, however, the
party shall immediately notify of such occurrence to the other party.
Article 18 Others
18.1 HEI and ChipPAC BVI shall make their best efforts to cooperate with
each other for the performance of this Agreement.
18.2 For the matters not provided in this Agreement or the parts where
there are different opinions for interpretation hereof, both parties
shall settle them by mutual consultation.
Article 19 Governing Law
8
<PAGE>
19.1 This Agreement shall be governed by the laws of Republic of Korea.
19.2 Any disputes arising in connection with and out of to the Agreement
shall be submitted to Seoul District Court.
* * * *
9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Service Agreement on the day
and year first above written.
Hyundai Electronics Industries Co., Ltd.:
San 136-1,. Ami-ri, Bubal-cup, ichon-si, Kyungki-do
Hyundai Electronic Industrial Co., Ltd.
Representative: Young Hwan Kim
Position: Representative Director, President
/s/ Y.H. Kim
__________________________
ChipPAC Limited
Craigmuir Chambers
Road Town, Tortola
British Virgin Islands
Representative: Richard Parsons, for Westlaw Limited
Position: Director
/s/ R. Parsons
- --------------------------
Appendices do not exist.
<PAGE>
Exhibit 10.11
-------------
PATENT SUBLICENSE AGREEMENT
---------------------------
THIS PATENT SUBLICENSE AGREEMENT (the "Agreement") is entered into as of
the Effective Time by and between Hyundai Electronics Industries Co., Ltd.,
Hyundai Jeonja Bldg., 66, Jeokseon-dong, Chongro-ku, Seoul, Korea (hereinafter
called "Hyundai"), and ChipPAC Limited, Craigmuir Chambers, P.O. Box 71, Road
Town, Tortola, British Virgin Islands (hereinafter called "ChipPAC").
WHEREAS, Hyundai is a party to that certain Patent License Agreement (the
"Motorola License Agreement") dated December 20, 1994, as amended by
Hyundai/Motorola Letter Agreements dated January 11, 1995, August 5, 1998 and
July 27, 1999, by and between Hyundai and Motorola, Inc., a Delaware corporation
("Motorola");
WHEREAS, in connection with, and as a condition to the consummation of, the
transactions contemplated by that certain Agreement and Plan of Recapitalization
and Merger dated March 13, 1999, as amended, by and among Hyundai, Hyundai
Electronics America, ChipPAC, Inc. and ChipPAC Merger Corp. (the
"Recapitalization Agreement"), Hyundai has agreed to grant to ChipPAC, and
ChipPAC desires to receive, a sublicense under the Motorola License Agreement;
WHEREAS, ChipPAC desires to retain such sublicense under the Motorola
License Agreement once ChipPAC ceases to be a subsidiary of Hyundai following
the Closing (as defined in the Recapitalization Agreement);
WHEREAS, ChipPAC also desires the right to sublicense its wholly-owned
subsidiaries under the Motorola License Agreement once it ceases to be a
subsidiary of Hyundai following the Closing; and
WHEREAS, Motorola has consented to the grant of such sublicense to ChipPAC
as well as the right for ChipPAC to retain such sublicense once it ceases to be
a subsidiary of Hyundai and the right for ChipPAC to grant further sublicenses
to its wholly-owned subsidiaries once it ceases to be a subsidiary of Hyundai;
NOW THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
<PAGE>
SECTION 1 - DEFINITIONS
-----------------------
1.1 Subsidiary(ies) means a corporation, company, or other entity which
is, now or hereafter, wholly owned or controlled, directly or indirectly, by a
party hereto, but such corporation, company or other entity shall be deemed to
be a Subsidiary only so long as such ownership or control exists.
1.2 Semiconductive Material means any material whose conductivity is
intermediate to that of metals and insulators at room temperature and whose
conductivity, over some temperature range, increases with increases in
temperature. Such material shall include but not be limited to refined products,
reaction products, reduced products, mixtures and compounds.
1.3 Integrated Circuit Structure means an integral unit consisting
primarily of a plurality of active and/or passive circuit elements associated
on, or in, a unitary body of Semiconductive Material for performing electrical
or electronic functions and, if provided therewith, such unit includes housing
and/or supporting means therefor.
1.4 Semiconductor Element means a device other than an Integrated Circuit
Structure consisting primarily of a body of Semiconductive Material having a
plurality of electrodes associated therewith, whether or not said body consists
of a single Semiconductive Material or of a multiplicity of such materials, and
whether or not said body includes one or more layers or other regions
(constituting substantially less than the whole of said body) of a material or
materials which are of a type other than Semiconductive Material and, if
provided therewith, such device including housing and/or supporting means
therefor.
1.5 Manufacturing Apparatus means as to each party hereto, any
instrumentality or aggregate of instrumentalities primarily designed for use in
the fabrication of that party's Licensed Products (as hereinafter defined).
1.6 Circuit(s) means a plurality of active and/or passive elements for
generating, receiving, transmitting, storing, transforming or acting in response
to an electrical signal.
1.7 Microprocessor(s) means one or more Integrated Circuit Structures
containing functional elements including registers, control logic, decision
logic, and input-output circuitry appropriately coupled to interconnections
which may include internal buses such as data buses, address buses, or control
buses and having a capability of executing temporarily or permanently stored
program instructions or microinstructions; and which may also have included on
said Integrated Circuit Structures, memory, clocks, input-output interface
circuitry, or other electronic functions ordinarily associated with or connected
to central processing units.
1.8 Input-Output Adaptor(s) means one or more Integrated Circuit
Structures which are adapted to provide an interface between a Microprocessor
and any instrumentality or aggregate of instrumentalities adapted to compute,
classify, process, transmit, receive, retrieve,
-2-
<PAGE>
originate, switch, store, display, manifest, measure, detect, record, reproduce,
handle, or utilize any form of information, intelligence or data for business,
scientific, control or other purposes, but shall not include such
instrumentality or aggregate of instrumentalities, per se.
1.9 System means one or more Circuit(s) whether or not combined with one
or more active and/or passive elements for performing electrical or electronic
functions, whether or not a housing and/or supporting means for said circuitry
is included.
1.10 Electrical Method means a method or steps for using Circuit(s) or
System(s), whether or not combined with one or more active and/or passive
element(s), for performing electrical or electronic function(s).
1.11 Motorola Patents shall have the same meaning ascribed to such term in
the Motorola License Agreement.
1.12 ChipPAC Patents means all classes or types of patents, utility
models, design patents and applications of the aforementioned of all countries
of the world which, prior to the date of expiration or termination of the
Motorola License Agreement are:
(i) issued, published or filed, and which arise out of inventions
made solely by one or more employees of ChipPAC, or
(ii) are acquired by ChipPAC;
and under which and to the extent to which and subject to the conditions under
which ChipPAC may have, as of the Effective Time of this Agreement, or may
thereafter during the term of this Agreement acquire, the right to grant
licenses or rights of the scope granted herein without the payment of royalties
or other consideration to third persons, except for payments to third persons
(a) for inventions made by said third persons while engaged by ChipPAC and (b)
as consideration for the acquisition of such patents, utility models, design
patents and applications.
1.13 Subsidiary Patents means all classes or types of patents, utility
models, design patents and applications of the aforementioned of all countries
of the world which, prior to the date of expiration or termination of the
Motorola License Agreement are:
(i) issued, published or filed, and which arise out of inventions
made solely by one or more employees of a sublicensed ChipPAC
Subsidiary, or
(ii) are acquired by a sublicensed ChipPAC Subsidiary;
and under which and to the extent to which and subject to the conditions under
which such sublicensed ChipPAC Subsidiary may have, as of the effective date of
such sublicense from ChipPAC, or may thereafter during the term of such
sublicense acquire, the right to grant
-3-
<PAGE>
licenses or rights of the scope granted herein without the payment of royalties
or other consideration to third persons, except for payments to third persons
(a) for inventions made by said third persons while engaged by such sublicensed
ChipPAC Subsidiary and (b) as consideration for the acquisition of such patents,
utility models, design patents and applications.
1.14 Licensed Motorola Product(s) or Licensed ChipPAC Product(s), as the
case may be, means any one or more of the following items, to the extent they
are covered by one or more claims of the ChipPAC Patents, the Subsidiary Patents
or the Motorola Patents, as applicable, whether or not an item is incorporated
in more comprehensive equipment:
1.14.1 Semiconductive Material(s);
1.14.2 Integrated Circuit Structure(s);
1.14.3 Semiconductor Element(s);
1.14.4 Circuit(s);
1.14.5 System(s);
1.14.6 Circuit(s) and System(s) employing an Electrical Method(s);
1.14.7 Microprocessor(s); and
1.14.8 Input-Output Adaptors.
1.15 Licensed Product(s), when used alone, means Licensed Motorola
Product(s) and/or Licensed ChipPAC Product(s), as the case may be.
1.16 ChipPAC Korea means ChipPAC Korea Company Ltd., a corporation
incorporated under the laws of the Republic of Korea.
1.17 ChipPAC Shanghai means, collectively, Hyundai Electronics (Shanghai)
Company Ltd. (in process of changing its name to ChipPAC (Shanghai) Company
Limited) and ChipPAC Assembly & Test (Shanghai) Co., Ltd., each a company
limited and a wholly foreign owned entity under the laws of the People's
Republic of China.
1.18 Effective Time means the moment of time immediately prior to the
Closing.
1.19 Closing shall have the same meaning ascribed to such term in the
Recapitalization Agreement.
-4-
<PAGE>
SECTION 2 - RIGHTS AND OBLIGATIONS PRIOR TO CLOSING
---------------------------------------------------
2.1 In accordance with Section 3.7 of the Motorola License Agreement as
-----------
modified by that certain letter agreement between Hyundai and Motorola dated
July 27, 1999, beginning as of the Effective Time and continuing for so long as
ChipPAC remains a Hyundai subsidiary (as defined in the Motorola License
Agreement):
2.1.1. Hyundai extends to ChipPAC, for any time prior to the
Effective Time, Motorola's release, acquittal and discharge from any and all
claims or liability for infringement or alleged infringement of any Motorola
Patents under which a license or a right has been granted by Motorola to or for
Hyundai pursuant to the Motorola License Agreement; and
2.1.2. Hyundai grants to ChipPAC, subject to the provisions of
Section 2.2 hereof, a non-exclusive, royalty-free, non-transferable sublicense
- -----------
throughout the world under the Motorola Patents, without the right to
sublicense;
(a) to make (including to make for others, whether or not
of their design), use, lease, sell, or otherwise dispose of, but not to have
made, Licensed ChipPAC Products of the same or similar type as those made, used,
leased, sold or otherwise disposed of by ChipPAC, Inc., ChipPAC Korea or ChipPAC
Shanghai in the conduct of their business prior to the Effective Time, and to
practice any process or method involved in the manufacture or use thereof, and
(b) to make, use and have made Manufacturing Apparatus of
the same or similar type as that made or used by ChipPAC, Inc., ChipPAC Korea or
ChipPAC Shanghai in the conduct of their business prior to the Effective Time,
and to practice any process or method involved in the use thereof, and
(c) to assemble for itself and for others the items listed in
Section 1.14, to the extent such items are of the same or similar type as those
- ------------
items assembled by ChipPAC, Inc., ChipPAC Korea or ChipPAC Shanghai in the
conduct of their business prior to the Effective Time; and
2.1.3. Hyundai extends to users of Licensed ChipPAC Products which
are imported, sold, leased or otherwise disposed of by ChipPAC, not in
contravention of the sublicense herein granted to ChipPAC, Motorola's grant of a
worldwide, non-exclusive and royalty-free immunity from suit under the Motorola
Patents, covering the use, whether direct or contributory, during the term of
this Agreement of such Licensed ChipPAC Products, provided that such royalty-
free immunity for the user shall extend only under those Motorola Patents
sublicensed by Hyundai hereunder and only to the use or sale of those particular
Licensed ChipPAC Products which the user obtained from ChipPAC, Inc. or one of
its Subsidiaries; and
-5-
<PAGE>
2.1.4. ChipPAC consents to extend the definition of Hyundai Patents
in Section 1.13 of the Motorola License Agreement to include inventions made by
employees of ChipPAC.
2.2 Notwithstanding the provisions of Section 2.1.2 or 3.1.1 hereof, in no
----------------------
event shall the sublicense granted to ChipPAC include the right to make, use, or
sell any product (i) which is object code compatible or upward object code
compatible with or which substantially utilizes the instruction set of or which
is substantially compatible with the programmer's model of, any Microprocessor
product designed and sold by Motorola or based on such a product; or which is
substantially compatible with the register set of any Input-Output Adapter
product designed and sold by Motorola, including but not limited to the products
of 65XX, M68XX, M68XXX, M1468XX, M68HCXX, M683XX, M88XXX, DSP56XXX, or DSP96XXX
families of Microprocessors and Input-Output Adaptors, or RISC products based on
the POWER and POWER PC architectures, or (ii) which incorporate such
Microprocessor or Input-Output Adaptor products as elements of their structure;
or (iii) which is substantially the same, in layout, architecture and/or circuit
design, to any product designed and sold by Motorola. However, ChipPAC shall
have the right, subject to all copyright and mask work rights owned or
controlled by Motorola and subject to the above limitations of this Section, to
develop and manufacture original designs of products performing substantially
the same functions as any Motorola Microprocessor, Input-Output Adaptor, or
other Circuit or Semiconductor Element products.
SECTION 3 - RIGHTS AND OBLIGATIONS FOLLOWING CLOSING
----------------------------------------------------
3.1 In accordance with the Motorola License Agreement as modified by that
certain letter agreement between Hyundai and Motorola dated July 27, 1999,
immediately following the Closing and continuing throughout the term of the
Motorola License Agreement:
3.1.1. ChipPAC shall retain, and Hyundai shall continue to grant to
ChipPAC, a non-exclusive, royalty-free, non-transferable sublicense throughout
the world under the Motorola Patents, with the additional right for ChipPAC to
grant sublicenses thereunder only to its Subsidiaries:
(a) to make (including to make for others, whether or not of
their design), use, lease, sell, or otherwise dispose of, but not to have made,
Licensed ChipPAC Products of the same or similar type as those made, used,
leased, sold or otherwise disposed of by ChipPAC, Inc., ChipPAC Korea or ChipPAC
Shanghai in the conduct of their business prior to the Effective Time, and to
practice any process or method involved in the manufacture or use thereof, and
(b) to make, use and have made Manufacturing Apparatus of the
same or similar type as that made or used by ChipPAC, Inc., ChipPAC Korea or
ChipPAC Shanghai in the conduct of their business prior to the Effective Time,
and to practice any process or method involved in the use thereof, and
-6-
<PAGE>
(c) to assemble for itself and for others the items listed in
Section 1.14, to the extent such items are of the same or similar type as those
- ------------
items assembled by ChipPAC, Inc., ChipPAC Korea or ChipPAC Shanghai in the
conduct of their business prior to the Effective Time; and
3.1.2. Users of Licensed ChipPAC Products shall retain, and Hyundai
shall continue to extend to users of Licensed ChipPAC Products which are
imported, sold, leased or otherwise disposed of by ChipPAC not in contravention
of the sublicense herein granted to ChipPAC, Motorola's grant of a worldwide,
non-exclusive and royalty-free immunity from suit under the Motorola Patents,
covering the use, whether direct or contributory, during the term of this
Agreement of such Licensed ChipPAC Products, provided that such royalty-free
immunity for the user shall extend only under those Motorola Patents sublicensed
by Hyundai hereunder and only to the use or sale of those particular Licensed
ChipPAC Products which the user obtained from ChipPAC, Inc. or one of its
Subsidiaries; and
3.1.3. ChipPAC and its sublicensed Subsidiaries release, acquit and
forever discharge Motorola for any time prior to the Closing from any and all
claims or liability for infringement or alleged infringement of any ChipPAC
Patents or Subsidiary Patents under which a license or a right was granted by
Hyundai to or for Motorola pursuant to the Motorola License Agreement; and
3.1.4. ChipPAC and its sublicensed Subsidiaries grant to Motorola a
non-exclusive, royalty-free, non-transferable license (without the right to
sublicense) throughout the world under the ChipPAC Patents and Subsidiary
Patents:
(a) to make (including to make for others, whether or not of
their design), use, lease, sell, or otherwise dispose of, but not to have made,
Licensed Motorola Products and to practice any process or method involved in the
manufacture or use thereof, and
(b) to make, use and have made Manufacturing Apparatus and to
practice any process or method involved in the use thereof, and
(c) to assemble for itself and for others the items listed in
Section 1.14; and
- ------------
3.1.5. ChipPAC and its sublicensed Subsidiaries grant to the users of
Licensed Motorola Products which are imported, sold, leased or otherwise
disposed of by Motorola, not in contravention of the license granted by ChipPAC
and its sublicensed Subsidiaries herein to Motorola, a worldwide, non-exclusive
and royalty-free immunity from suit under the ChipPAC Patents and Subsidiary
Patents, covering the use, whether direct or contributory, during the term of
this Agreement of such Licensed Motorola Products, provided that such royalty-
free immunity for the user shall extend only under those ChipPAC Patents and
Subsidiary Patents licensed by
-7-
<PAGE>
ChipPAC and its sublicensed Subsidiaries hereunder and only to the use or sale
of those particular Licensed Motorola Products which the user obtained from
Motorola.
3.2 It is understood and agreed that the rights granted pursuant to
Sections 3.1.1 and 3.1.2 hereof extend only to ChipPAC and its sublicensed
- ------------------------
Subsidiaries and may not be assigned or transferred by ChipPAC or its
sublicensed Subsidiaries without the consent of Motorola. It is further
understood and agreed that (i) in the event ChipPAC or any of its sublicensed
Subsidiaries are acquired by or acquire, directly or indirectly, another entity
or part thereof, the rights granted to ChipPAC or such sublicensed Subsidiary,
as applicable, shall not inure to such acquiring or acquired, as applicable,
entity and (ii) the rights granted to ChipPAC and its sublicensed Subsidiaries
pursuant to Sections 3.1.1 and 3.1.2 hereof shall extend to any industry-normal
------------------------
growth experienced by ChipPAC and such sublicensed Subsidiaries.
SECTION 4 - TERM, TERMINATION, AND ASSIGNABILITY
------------------------------------------------
4.1 The term of this Agreement shall be from the Effective Time until
expiration or termination of the Motorola License Agreement.
4.2 In the event Hyundai, in its sole discretion, seeks to extend, modify,
renew or amend the rights, releases and grants of the Motorola License Agreement
prior to its expiration on December 31, 2002, Hyundai shall use commercially
reasonable efforts to obtain the right from Motorola to grant ChipPAC a
sublicense (with the right for ChipPAC to grant sublicenses to its Subsidiaries)
under such extension, modification, amendment or renewal, subject to the
following:
4.2.1. Upon being notified in writing that Hyundai has elected to
seek a renewal, extension, modification or amendment of the Motorola License
Agreement, ChipPAC shall confirm in writing within ten (10) business days of
such notification that ChipPAC is interested in pursuing a sublicense
thereunder.
4.2.2. In connection with Motorola permitting a sublicense to ChipPAC
and its Subsidiaries, ChipPAC and its Subsidiaries shall allow Hyundai to grant
Motorola a license consistent with the scope of Section 3.1 of the Motorola
-----------
License Agreement under any patents of ChipPAC or its Subsidiaries issued,
owned, controlled or pending throughout the world during the term of such
extension, renewal, amendment or modification of the Motorola License Agreement.
4.2.3. In the event the Motorola License Agreement is extended,
renewed, amended or otherwise modified to extend all or a portion of the rights
granted therein, and Hyundai is permitted to grant ChipPAC a sublicense
thereunder, at the option of ChipPAC this Agreement may be extended, renewed,
amended or modified consistent therewith.
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<PAGE>
4.2.4. In the event Hyundai obtains the right to sublicense ChipPAC
and its Subsidiaries and such extended, renewed, amended or modified Motorola
License Agreement requires payment by Hyundai to Motorola, ChipPAC's payment
obligation under such sublicense shall be prorated in a commercially reasonable
manner as agreed between ChipPAC and Hyundai.
4.3 Except as otherwise provided in Section 3.2 of this Agreement, the
-----------
rights and privileges provided for in this Agreement may be assigned or
transferred by either party only with the prior written consent of the other
party, which consent shall not be unreasonably withheld, and with the
authorization or approval of any governmental authority as then may be required;
provided, however, that no such consent shall be required to assign or transfer
- -------- -------
to a successor in ownership of all or substantially all of the assets of the
assigning or transferring party; provided, further, that such successor, before
-------- -------
such assignment or transfer is effective, shall expressly assume in writing to
the other party the performance of all of the terms and conditions of the
assigning or transferring party.
SECTION 5 - MISCELLANEOUS PROVISIONS
------------------------------------
5.1 Each of the parties hereto represents and warrants that it has the
right to grant to or for the benefit of the other or Motorola the releases,
rights and licenses granted hereunder in Sections 2 and 3.
----------------
5.2 Each of Hyundai and ChipPAC hereby covenant and agree not to do or
fail to do any act or thing that would cause the Motorola License Agreement to
be terminated prior to its expiration on December 31, 2002.
5.3 Nothing contained in this Agreement shall be construed as:
5.3.1. restricting the right of Hyundai or Motorola or any of their
Subsidiaries to make use, sell, lease or otherwise dispose of any particular
product or products not herein licensed;
5.3.2. restricting the right of ChipPAC or any of its Subsidiaries to
make, use, sell, lease or otherwise dispose of any particular product or
products not herein licensed;
5.3.3. an admission by ChipPAC of, or a warranty or representation by
Hyundai as to, the validity and/or scope of the Motorola Patents, or a
limitation on ChipPAC to contest, in any proceeding, the validity and/or scope
thereof;
5.3.4. an admission by Hyundai of, or a warranty or representation by
ChipPAC as to, the validity and/or scope of the ChipPAC Patents, or a limitation
on Hyundai to contest, in any proceeding, the validity and/or scope thereof;
-9-
<PAGE>
5.3.5. conferring any license or other right, by implication,
estoppel or otherwise, under any patent application, patent or patent right,
except as herein expressly granted under the Motorola Patents, the ChipPAC
Patents and the Subsidiary Patents;
5.3.6. conferring any license or right with respect to any trademark,
trade or brand name, or corporate name of either party or Motorola or any of
their respective Subsidiaries, or any other name or mark, or contraction,
abbreviation or simulation thereof;
5.3.7. imposing on Motorola or Hyundai any obligation to institute
any suit or action for infringement of any Motorola Patents, or to defend any
suit or action brought by a third party which challenges or concerns the
validity of any Motorola Patents which are the subject of this Agreement;
5.3.8. imposing upon ChipPAC any obligation to institute any suit or
action for infringement of any ChipPAC Patents or Subsidiary Patents, or to
defend any suit or action brought by a third party which challenges or concerns
the validity of any ChipPAC Patents or Subsidiary Patents which are the subject
of this Agreement;
5.3.9. a warranty or representation by Motorola or Hyundai that any
manufacture, use, sale, lease or other disposition of Licensed ChipPAC Products
will be free from infringement of any patent other than the Motorola Patents
which are the subject of this Agreement;
5.3.10. a warranty or representation by ChipPAC that any manufacture,
use, sale, lease or other disposition of Licensed Motorola Products will be free
from infringement of any patent other than the ChipPAC Patents which are the
subject of this Agreement;
5.3.11. imposing on either party any obligation to file any patent
application or to secure any patent or maintain any patent in force; or
5.3.12. an obligation on either party to furnish any manufacturing or
technical information under this Agreement except as the same is specifically
provided for herein.
5.4 No license under any copyrights or mask work rights of Motorola,
ChipPAC or any sublicensed ChipPAC Subsidiary are granted under this Agreement.
5.5 No express or implied waiver by either of the parties to this
Agreement of any breach of any term, condition or obligation of this Agreement
by the other party shall be construed as a waiver of any subsequent breach of
that term, condition or obligation or of any other term, condition or obligation
of this Agreement of the same or of a different nature.
5.6 Anything contained in this Agreement to the contrary notwithstanding,
the obligations of the parties hereto shall be subject to all laws, both present
and future, of any
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<PAGE>
Government having jurisdiction over either party hereto, and to orders or
regulations of any such Government, or any department, agency, or court thereof,
and acts of war, acts of public enemies, strikes, or other labor disturbances,
fires, floods, acts of God, or any causes of like or different kind beyond the
control of the parties, and the parties hereto shall be excused from any failure
to perform any obligation hereunder to the extent such failure is caused by any
such law, order, regulation, or contingency but only so long as said law, order,
regulation or contingency continues.
5.7 The captions used in this Agreement are for convenience only, and are
not to be used in interpreting the obligations of the parties under this
Agreement.
5.8 This Agreement is in the English language only, which language shall
be controlling in all respects, and all versions hereof in any other language
shall be for accommodation only and shall not be binding upon the parties
hereto. All communications to be made or given pursuant to this Agreement shall
be in the English language.
5.9 This Agreement and the performance of the parties hereunder shall be
construed in accordance with and governed by the laws of the State of Illinois.
5.10 If any term, clause, or provision of this Agreement shall be judged to
be invalid, the validity of any other term, clause, or provision shall not be
affected, and such invalid term, clause, or provision shall be deemed deleted
from this Agreement.
5.11 This Agreement sets forth the entire Agreement and understanding
between the parties as to the subject matter hereof and merges all prior
discussions between them, and neither of the parties shall be bound to any
conditions, definitions, warranties, understandings or representations with
respect to such subject matter other than as expressly provided herein or as
duly set forth on or subsequent to the date hereof in writing and signed by a
proper and duly authorized officer or representative of the party to be bound
thereby.
5.12 The parties hereto shall keep this Agreement confidential and shall
not now or hereafter divulge this Agreement or any part thereof to any third
party except:
5.12.1. with the prior written consent of the other party; or
5.12.2. to any governmental body having jurisdiction to request and
to read the same; or
5.12.3. as otherwise may be required by law or legal processes; or
5.12.4. to legal counsel representing either party; or
-11-
<PAGE>
5.12.5. in connection with either party's debt or equity financing;
or
5.12.6. to Motorola.
5.13. All notices required or permitted to be given hereunder shall be in
writing and shall be valid and sufficient if dispatched by registered airmail,
postage prepaid, in any post office in the United States, Korea or the British
Virgin Islands, or sent by reputable overnight courier, addressed as follows:
If to Hyundai:
-------------
Hyundai Electronics Industries Co., Ltd.
10/th/ Floor
Hyundai Jeonja Building
66 Jeokseon-dong, Jongro-ku
Seoul, Korea
Attention: Senior Manager, Patent Department
If to ChipPAC:
-------------
ChipPAC Limited
Craigmuir Chambers
P.O. Box 71
Road Town
Tortola, British Virgin Islands
Attention: Resident Director
with a copy to:
ChipPAC, Inc.
3151 Coronado Drive
Santa Clara, California 95054
Attention: President
5.13.1. The date of receipt of such a notice shall be the date for
the commencement of the running of the period provided for in such notice, or
the date at which such notice takes effect, as the case may be.
5.14 This Agreement may be executed in counterparts, all of which together
shall constitute one and the same Agreement.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate.
Hyundai Electronics Industries Co., Ltd ChipPAC Limited
By: /s/ D.S. Chung By: /s/ Richard Parsons
----------------------------------- ---------------------------
Name: D.S. Chung Name: Richard Parsons
--------------------------------- -------------------------
Title: Director Title: Director
-------------------------------- ------------------------
Date: August 4, 1999 Date: August 4, 1999
--------------------------------- -------------------------
<PAGE>
EXHIBIT 10.12
Tessera Confidential
- --------------------
TESSERA, INC.
TCC(R) License Agreement
This Agreement is entered into as of this 22/nd/ day of December, 1998
("Effective Date"), between TESSERA INC., a corporation organized under the laws
of Delaware, having a principal place of business at 3099 Orchard Drive, San
Jose CA 95134 and the Tessera Affiliates ("Tessera") and CHIPPAC, INC., a
corporation organized under the laws of California, having a principal place of
business at 3151 Coronado Drive, Santa Clara, CA 95054 and the Licensee
Affiliates ("Licensee") with reference to the following facts:
Scope:
-----
WHEREAS, Tessera owns certain semiconductor integrated circuit ("IC") packaging
technology it calls TCC technology along with related IC tape design and
mounting technology it calls TCMT technology, where said technologies include
manufacturing processes, package device designs and specifications, including
design rules and certain other proprietary information and technology required
to manufacture TCC packages, and
WHEREAS, Licensee wishes to use the Tessera patented technology and Technical
Information to assemble said TCC packages and to sell same in accordance with
the terms hereof.
The Parties Hereto Agree:
I. Definitions. As used herein, the following terms shall have the
following meaning:
A. The term "TCC" is an acronym for Tessera Compliant Chip, a type of
integrated circuit ("IC") package which is the subject matter of certain Tessera
Patents licensed hereunder. By way of non-limiting examples, such TCC packages
may include IC packages that are in a fan-in arrangement (where external
electrical terminals overlie a surface of an IC device) or are in a fan-out
arrangement (where external electrical terminals are arranged beyond the
periphery of an IC device) or are in a fan-in/fan-out arrangement (where
external electrical terminals both overlie a surface of an IC device and extend
beyond the periphery of the IC device). In such examples, the contact bearing
surface of the IC device may face either towards or away from the external
electrical terminals.
B. The term "Tape" shall mean any flexible film circuit starting material
that may be made under certain of the Tessera Patents, including but not limited
to TAB tape, flex-circuit film, and substantial equivalents commonly available
in the industry.
C. The verbs "Convert" and "Converted" and the noun, "Conversion" refer
to a process or method by which Tape (whether or not made under the Tessera
Patents) is configured with a compliant die mounting layer, die attach adhesive
layer, or otherwise disposed for subsequent packaging of an IC in a TCC package.
D. The term "TCMT" means Converted Tape capable of being incorporated
into the manufacture of a TCC package.
Page 1 of 21
<PAGE>
E. The term "Technical Information" means Tessera Tape Conversion and
package assembly know-how relating to the relating to design, manufacture and
assembly of TCC packages (excluding Batch Technology as defined herein) which
may be proprietary and/or confidential in nature and which may include, without
limitation, material specifications, current best method of assembly, tooling
specifications, design methods and techniques, proprietary software, process
data, yields, reliability data, and other Tessera engineering data and test
results needed by Licensee (the foregoing by mutual agreement) to exercise the
rights, licenses and privileges granted hereunder.
F. The term "Batch Technology" as used herein means Patents and technical
information relating to or including: (i) any method or result of U.S. Patent
Number 5,518,964 (and related Patents) for making flexible electrically
conducting element(s), joining said elements to electrical contact(s) on a
substantially planar electrical element such as a semiconductor integrated
circuit, undiced IC wafer, or interconnect substrate, and forming said
element(s) away from the plane of said contacts in a predetermined fashion into
the flexible electrical lead(s) of a TCC package; (ii) any method or result of
U.S. Patent 5,455,390 (and related Patents) for making and forming flexible
conducting element(s) on a dielectric film and then simultaneously joining said
elements to electrical contacts on a substantially planar electrical element
such as a semiconductor integrated circuit, undiced IC wafer or interconnect
substrate to produce the flexible electrical leads of a TCC package; and/or
(iii) any method or result of further invention or Patent made or acquired by
Tessera during the term hereof covering any processing method for simultaneously
forming, producing and/or connecting a plurality of flexible electrical leads of
a TCC package. Notwithstanding, the parties expressly agree that any TCC package
made and/or connected individually on a semiconductor integrated circuit or
undiced wafer by traditional wire bonding methods and/or tape automated bonding
("TAB") gang bonding methods, is not included in Batch Technology .
---
G. The term "Patent" means letters patents, utility models, allowances
and applications therefor in all countries of the world, including re-issues,
re-examinations, continuations, continuations-in-part, divisionals, and all
corresponding foreign patents.
H. The term "Tessera Patent" means Patent(s) assigned to Tessera that
arise out of inventions based on the Technical Information made and/or acquired
by Tessera prior to expiration or termination of this Agreement (excluding Batch
Technology as defined herein). The term Tessera Patent shall further include any
third party patent based on Technical Information (excluding Batch Technology as
defined herein) under which Tessera or any successor thereof has the right to
grant licenses of the scope granted herein, as of the Effective Date or at any
time during the term of this Agreement, without the payment of royalty or other
consideration to such third parties except for payment to third parties for
inventions made by said parties while employed by Tessera or any successor
thereof. As of the Effective Date of this Agreement, Tessera Patents, as defined
above, consist of those Patents set forth in Attachment A. Tessera has sole
discretion in the prosecution of the Tessera patent applications prospectively
licensed hereunder, non-exclusively including filing continuations,
continuations-in-part, divisionals, filing corresponding foreign patents
applications and/or abandoning one or more of such patent applications.
Page 2 of 21
<PAGE>
I. The term "Billable Pin" means any electrical connection to an IC bond
pad made or contained in any TCC package licensed hereunder.
J. The term "Licensee Improvements" means derivatives, improvements,
modifications, or enhanced specifications relating to a TCC package, or related
materials, that may infringe a Tessera Patent or may be made or incorporated in
a TCC package by or for Licensee.
K. The term "Standards" means those minimum standards as set forth in
Attachment C pursuant to which Licensee may sell any TCC package under a Mark
(as defined in Paragraph VIII.).
L. The term "Licensee Affiliate" means any company which agrees to be
bound by the terms and conditions of this Agreement and has more than fifty
percent (50%) of the voting stock owned or controlled by Licensee. A company
shall be considered a Licensee Affiliate only so long as such majority
ownership or control exists. Licensee shall be ultimately responsible for the
actions of the Licensee Affiliates pursuant to this Agreement.
M. The term "Tessera Affiliate" means any company which agrees to be
bound by the terms and conditions of this Agreement and has more than fifty
percent (50%) of the voting stock owned or controlled by Tessera. A company
shall be considered a Tessera Affiliate only so long as such majority ownership
or control exists.
II. Licensee Rights
A. License Grant. Subject to the terms and conditions hereinafter set
forth, Licensee's agreement to the provisions hereof including all attachments
hereto, and Licensee's payment of the fees and royalties stated herein in
Paragraph III, Tessera hereby grants Licensee a world-wide, non-exclusive,
non-transferable, non-sublicensable, limited license to the Tessera Patents and
Technical Information to make or have made Tape and Convert or have Converted
such Tape into TCMT (such Tape and Conversion rights pursuant to Paragraph IX)
for Licensee to package and/or assemble ICs into TCC packages and use or sell
such TCC packages. Licensee specifically is not granted any "have made" rights
---
which would allow Licensee to have non-Affiliates package and/or assemble ICs
into TCC packages for Licensee.
B. Batch Technology Excluded. Notwithstanding anything herein to the
contrary, Batch Technology is excluded from the scope of this Agreement, and
Licensee's rights herein expressly exclude any right to package and/or assemble,
or sell any TCC package made using Batch Technology.
C. No Implied License. Notwithstanding the foregoing, nothing in this
Agreement shall be construed to grant Licensee or its Affiliates, successors or
assigns or any third parties an implied license under any patent owned by
Tessera other than the Tessera Patents (as defined above).
III. Fee and Royalty
A. License Fee. As consideration for the licenses and privileges of
Paragraph II.A. hereof, Licensee shall pay to Tessera [redacted*] within thirty
(30) days of the Effective Date of this Agreement.
Page 3 of 21
*Confidential Treatment Requested.
<PAGE>
B. Royalty. In addition to the License Fee, Licensee shall pay running
royalties for the license granted in Paragraph II.A. four times annually (as set
forth in Paragraph V) to Tessera during the term of this Agreement. Licensee
shall pay [redacted*] for TCC packages made by Licensee hereunder, whether sold,
transferred or used internally. After Licensee has paid to Tessera[redacted*] in
royalties, the Licensee shall begin paying a mid-range [redacted*] for TCC
packages made by Licensee hereunder, whether sold, transferred or used
internally. After Licensee has paid to Tessera [redacted*] in cumulative
royalties, Licensee shall begin paying a base royalty of [redacted*] for TCC
packages made by License hereunder, whether sold, transferred or used internally
for the remainder of this Agreement.
C. Royalty Buy-Down Payment. At any time, Licensee may elect to pay
Tessera [redacted*] in which event said Licensee shall notify Tessera of
Licensee's intent to exercise the option under this Paragraph and tender such
payment and henceforth pay royalties at the base royalty level of [redacted*]
(as set forth in Paragraph III.B., above). Such royalty buy-down payment shall
not affect the royalties Licensee has paid to Tessera prior to Licensee's
exercise of the royalty buy-down set forth in this Paragraph.
IV. Taxes
All payments or royalties due Tessera under this Agreement shall be deemed
payments or royalties for goods, services, Technology and/or Technical
Information provided and delivered by Tessera free on board (f.o.b.) Tessera's
San Jose, California facility. As such, payments and royalties due hereunder
shall be calculated and paid by Licensee to Tessera on a "net cash" basis per
the terms hereof and shall be free of and not reduced in any way by any imposed
taxes or other assessments that may be levied by any government or country
except for those taxes that may be imposed and collected by the United States
and/or the State of California. If Tessera receives any tax credits by the U.S.
Government based upon the tax paid on the royalties paid to Tessera by Licensee,
Tessera will reimburse Licensee for in the amount corresponding to such U.S. tax
credit.
V. Licensee Reports and Payment
A. Quarterly Royalty Payments. Beginning on the Effective Date of this
Agreement, royalties shall be calculated and paid in full in quarter annual
payment periods ending March 31, June 30, September 30 and December 31 of each
year. Beginning with the first such royalty payment, Licensee shall deliver a
written report (as shown in Attachment B) describing the basis upon and
containing the information sufficient to determine the royalties due Tessera for
the applicable payment period. All payments under this Paragraph shall be made
in US Dollars by wire transfer to Union Bank of California, 99 Almaden Blvd.,
San Jose, CA 95113, Account Name: Tessera, Account No.: 6450148359, Routing No.
122000496, International Swift Code: UBLAUS66, or such other bank or account as
Tessera may from time to time designate in writing. The payments of royalties
and submission such reports from Licensee to Tessera under this
Page 4 of 21
*Confidential Treatment Requested.
<PAGE>
Paragraph shall be made within thirty (30) days from the end of each quarter
annual payment period and shall be considered to be made as of the day on which
such payments are received in Tessera's designated bank account.
VI. Tessera Training Services
Licensee may request engineering support (not to exceed forty (40) working
days) in the first twelve (12) month period of this Agreement, according to a
mutually agreeable time schedule and manpower assignment schedule, at a per diem
rate of US $1,200 per support engineer, plus reasonable air travel and hotel
charges. Any engineering support or other services required thereafter may be
provided upon terms mutually agreeable to the parties. Licensee agrees to pay
all reasonable coach class air travel and hotel charges incurred by Tessera
personnel in connection with engineering support performed at any of Licensee's
facilities outside of San Jose. Engineering interactions, conducted to
collaborate on technical issues of mutual concern, shall be supported by each
party at its own expense.
VII. TCC Improvement Cross-License
A. Tessera Improvements. Tessera will make available TCC package
improvements which have been reduced to practice including changes and
modifications in Standards, methods, materials and specifications relating to
TCC packages during the term of this Agreement. Notwithstanding the foregoing,
Tessera is under no obligation to transfer and/or license any information
whether confidential, proprietary or otherwise that it may be prohibited from
transferring to Licensee by contract with a third party or applicable law.
Notwithstanding any provision to the contrary, Tessera shall not be under any
obligation to transfer or disclose actual patent applications or related
documents to Licensee.
B. Licensee Improvements. Licensee hereby grants to Tessera a world-wide,
fully-paid, non-exclusive, non-sublicensable, non-transferable, perpetual, right
to use Licensee Improvements and Licensee's Patents covering any inventions
contained in such Licensee Improvements to manufacture, have manufactured for
Tessera, use or sell TCC packages.
C. Cross Licensing With Other Tessera Licensees. Licensee agrees to grant
to the other licensees of Tessera on commercially reasonable terms a non-
exclusive, non-transferable, non-sublicensable license under Licensee's Patents
covering any inventions contained in such Licensee Improvements that are
discoverable from an examination of the TCC packages made by Licensee unless
such other licensees refuse to grant to Licensee similar licenses under any of
such other licensees' patents relating to any improvements developed by such
other licensee on similar commercially reasonable terms. In no event shall
Licensee be under any obligation to grant such licenses to other licensees of
Tessera, unless Licensee Improvements are used in IC packages sold externally to
non-Affiliates or proposed by Licensee and adopted for incorporation into a TCC
packaging standard.
D. Joint Improvements. Any improvement that is made through the joint
inventive efforts of Tessera and Licensee shall be deemed a "Joint Improvement"
hereunder and shall be the joint property of both Tessera and Licensee, and both
Tessera and Licensee shall have a fully-paid,
Page 5 of 21
<PAGE>
non-assessable, transferable, perpetual, sub-licensable right and license to use
such Joint Improvements, but such right and license shall not include any right
of license by implication with respect to any part of the Tessera Patents.
Licensee and Tessera shall reasonably consult with one another with respect to
applying for and maintaining jointly owned patents with respect to such Joint
Improvements at shared expense. In the event that one party hereto (the
"Notifying Party") notifies the other party that the Notifying Party wishes to
apply for or maintain a patent in any country for any such Joint Improvement and
the other party hereto does not confirm to the Notifying Party, within thirty
(30) days thereafter, that such other party will join in such patent application
and share the cost thereof, the Notifying Party shall have a right, at its own
expense, to apply for or maintain such patent in its own name, in which case
such patent shall be the sole property of the Notifying Party, and the Joint
Invention in the country covered by such patent shall be treated as an
improvement made solely by the Notifying Party, and shall be subject to the
provisions of this Agreement covering such party improvements. The parties
hereto shall execute such documents and render such assistance as may be
appropriate to enable the party properly having title to such improvements to
maintain or obtain patents for the same.
VIII. Trademarks & License Notice
A. Trademark Ownership. Licensee acknowledges Tessera's ownership of
the following trademarks: TESSERA BLOCK LOGO, TCC, COMPLIANT CHIP, (micro)BGA,
Micro BGA and F-(micro)BGA (hereinafter "Marks"). Licensee agrees that it will
do nothing inconsistent with such ownership and that all use of the Marks by
Licensee shall inure to the benefit of and be on behalf of Tessera. Licensee
agrees that nothing in this Agreement shall give Licensee any right, title or
interest in the Marks other than the right to use the Marks in accordance with
this Agreement to make and sell TCC packages according to the Standards.
B. Trademark License Grant. Subject to the IC packages manufactured
pursuant to this Agreement meeting all of the Standards (as defined in Paragraph
I.K and listed in Attachment C), Licensee's agreement and compliance with to
other provisions of this Agreement including all attachments hereto, and
Licensee's payment of the fees and royalties stated herein in Paragraph III,
Tessera hereby grants Licensee a non-exclusive, non-transferable, non-
sublicensable limited license to use the Marks to identify and distinguish
Licensee's royalty bearing TCC packages that are sold by Licensee under this
Agreement, subject to the proper use of such Marks (as set forth in this
Paragraph below) and the acknowledgement of ownership of such Marks in
documentation, articles and promotional material; to wit, each such use shall
contain the following text:"_______ (List of the Marks used in the item) are
trademarks of Tessera, Inc." or a suitable variant thereof to account for a
singular use of one or more of the Marks.
C. Trademark Form of Use. Licensee shall use its best efforts to use
the Marks as modifiers in conjunction with generic nouns, e.g. the (micro)BGA(R)
package. Further, all of the Marks, except "Micro BGA" and "F-(micro)BGA", are
federally registered by the U.S. Trademark Office. As such, Licensee shall use
the "(R)" symbol adjacent the Marks in all titles and headings and other
prominent uses of the Marks and shall also use its best efforts to use the "(R)"
symbol on at least the first and most obvious use of each of the Marks within
the text of any printed material. "Micro BGA" and "F-(micro)BGA" are common law
trademarks of Tessera. As such, Licensee shall use the "(TM)" symbol adjacent
this Mark in all titles and headings and other prominent uses of the Micro BGA
Page 6 of 21
<PAGE>
marks and shall also use its best efforts to use the "(TM)" symbol on at least
the first and most obvious use of each such mark within the text of any printed
material.
D. License Notice. Licensee promotional material and advertisements
referring to royalty bearing TCC packages shall include a prominent written
notice that "These products are made under a license from Tessera, Inc.".
IX. Material Suppliers
Licensee may enter agreements ("Subcontract") with suppliers of Tape, TCMT
and other related packaging materials ("Supplier"), provided that: (a) prior to
any disclosure of Tessera confidential information, Licensee and Supplier shall
execute a Non-Disclosure Agreement having substantially similar terms as
Paragraph XIV herein (Non-Disclosure); (b) Licensee shall ensure that Supplier
receives no property rights to the Technical Information transferred under
Subcontract and that the rights to any improvements to the Technical Information
made by Supplier shall be Licensee Improvements as set forth in this Agreement;
(c) Licensee shall ensure that Supplier respects Licensee's duty to affix the
appropriate notices, trademarks and other designations to each product or
material made using the Technical Information as set forth under this Agreement;
and (d) Licensee shall indemnify and hold harmless Tessera and its successors
and assigns against any breach or any damages, costs, or expenses arising from
or related to any breach by Licensee or Supplier of the foregoing obligations.
Notwithstanding, this Paragraph does not apply to any technology independently
developed by a Supplier.
X. Term and Termination
A. Term. This Agreement shall become effective on the Effective Date and,
unless earlier terminated as provided for elsewhere in this Agreement, shall
remain in full force until the expiration of the last to expire of any Tessera
Patent.
B. Termination for Breach. Either party may terminate this Agreement due
to the other party's breach of this Agreement, such as failure to perform its
duties, obligations, or responsibilities herein (including, without limitation,
failure to pay royalties and provide reports as set forth herein). The parties
agree that such breach will cause substantial damages to the party not in
breach. Therefore, the parties agree to work together to mitigate the effect of
any such breach; however, the non-breaching party may terminate this Agreement
if such breach is not cured or sufficiently mitigated (to the non-breaching
party's satisfaction) within sixty (60) days of notice thereof.
C. Termination for Assignment. In the event that (i) a party either sells
or assigns substantially all of its assets or business to a third party
("Selling Party") or (ii) a third party acquires more than fifty percent (50%)
of the capital stock entitled to vote for directors of such party ("Purchasing
Party"), the Selling Party shall notify the other party hereto of such sale or
assignment of assets or the Purchasing Party's acquisition. In any case of sale,
assignment or acquisition, the Selling Party shall provide to the other party a
written confirmation from such Purchasing Party stating that such Purchasing
Party shall expressly undertake all the terms and conditions of this Agreement
to be performed by Selling Party. In the event that Licensee is the Selling
Party and the Purchasing Party does not agree to fulfill such obligations under
this Agreement, Tessera shall
Page 7 of 21
<PAGE>
reserve a right to terminate this Agreement. In the event Tessera is the Selling
Party, the Purchasing Party shall be bound to the terms and obligations of this
Agreement.
D. Termination for Bankruptcy. In the event that one party becomes
insolvent or bankrupt, permanently ceases doing business, makes an assignment
for the benefit of its creditors, commits an act of bankruptcy, commences any
bankruptcy proceedings or other proceedings in the nature of bankruptcy
proceedings, or has commenced against it any bankruptcy proceedings or other
proceedings in the nature of bankruptcy proceedings that are not dismissed
within sixty (60) days, then the other party shall have the right to terminate
this Agreement immediately upon its notice.
E. Any termination of this Agreement pursuant to this Paragraph X shall
be deemed a termination of this Agreement in accordance with its terms
(including termination of any payments of unaccrued royalties to Tessera and any
rights of Licensee to use any Tessera Patent or Technical Information licensed
hereunder).
F. Survival Clause. Unless otherwise provided elsewhere in this
Agreement, the following provisions shall survive the termination or expiration
of this Agreement:
1. Licensee's obligation to make payments to Tessera accrued under
this Agreement on or prior to expiration or termination.
2. Licensee's obligation to submit written reports stipulated in
Paragraph V, Licensee Reports and Payment, and to permit the inspection and
audit of its account record stipulated in Paragraph XI, Reasonable Audit.
3. Paragraph VII.B., Licensee Improvements
4. Paragraph X, Term and Termination.
5. Paragraph X11, No Warranties
6. Paragraph XIII, Limitation on Damages
7. Paragraph XIV, Non-Disclosure.
8. Paragraph XV, Indemnity
9. Paragraph XVI, Miscellaneous
XI. Reasonable Audit
A. Financial Audit. Upon reasonable written prior notice, Tessera shall
have the right to examine and audit through an independent third party CPA firm,
not more frequently than once per year, all records of Licensee that may contain
information bearing upon the amount of fees payable under this Agreement;
provided, that the said auditor shall have agreed in advance in writing to
maintain in confidence and not to disclose to Tessera or any third party any
Licensee proprietary
Page 8 of 21
<PAGE>
information obtained during the course of such audit. The results of any such
audit shall be final, and within thirty (30) days after receiving the auditor's
report, Licensee shall make payment to Tessera of any amount which may be found
to be payable, if any. Tessera shall bear the expenses of such audit
examinations unless royalties due and owing to Tessera are determined by the
auditor to be at least five percent (5%) greater than such similar amounts as
calculated and/or paid by Licensee, in which case Licensee shall bear such
expenses.
B. Standards Audit. Prior to the first shipment of TCC packages to a
third party by Licensee upon which Licensee intends to bear the Marks under the
license set forth in Paragraph VIII.B. pursuant to this Agreement, Licensee
shall provide Tessera with sufficient quantities of such packages to enable
Tessera to determine if such packages are in compliance with the Standards. Upon
receipt of such packages, Tessera shall promptly perform the tests set forth in
Attachment C and provide a written report to Licensee detailing the results of
the tests so performed. After the Licensee manufactured TCC packages have passed
Tessera's testing requirements, Licensee may use the Marks as set forth in
Paragraph VIII. To ensure the on-going, future minimum quality and reliability
of the TCC packages sold by Licensee under any of the Marks pursuant to this
Agreement, Tessera shall have a right to perform the tests set forth in
Attachment C at any time during the term of this Agreement upon 60 day written
notice by Tessera to Licensee of Tessera's intention to perform such Standards
testing. Upon Licensee's receipt of such written notice from Tessera, Licensee
shall promptly provide sufficient quantities of TCC packages for such testing.
Upon receipt of such packages, Tessera shall promptly perform the tests and
provide a written report to Licensee detailing the results of the tests so
performed.
XII. No Warranties
Licensee acknowledges and agrees that the rights and licenses, Tessera
Patents, Technical Information and specifications granted or otherwise provided
hereunder are provided to Licensee "AS IS", with no warranty of any kind.
TESSERA MAKES NO WARRANTY, EPRESS IMPLIED, STATUTORY OR OTHERWISE, CONCERNING
THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, WARRANTIES
OF FITNESS FOR A PARTICULAR PURPOSE, QUALITY, USEFULNESS OR NONINFRINGEMENT.
Tessera makes no warranty that the Tessera Patents, Technical Information,
specifications or Standards will be sufficient to yield any particular result.
XIII. Limitation on Damages
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY OTHER
PERSON OR ENTITY (UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER
THEORY) FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR
RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT, EVEN IF THE PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSSES.
Page 9 of 21
<PAGE>
XIV. Non-disclosure
A. Confidential Information Definition. "Confidential Information"
includes all information disclosed prior to the expiration or termination of
this Agreement by one party to another hereunder including, without limitation,
ideas, inventions (whether patentable or not), designs, product concepts,
improvements, manufacturing tolerances, quality standards, business strategies,
forecasts, customer lists, product development plans and marketing plans,
provided that such information is designated and marked as being confidential in
nature by the disclosing party at the time of disclosure to the receiving party
and provided further that such information, if disclosed orally, is reduced to
writing, marked as being confidential, and delivered to the receiving party
within thirty (30) days after such disclosure.
B. Exclusions. Notwithstanding, Confidential Information shall not
include any information which: (1) was lawfully in possession prior to receipt
from disclosing party; (2) is or becomes a matter of public knowledge through no
fault of the receiving party; (3) is lawfully obtained by the receiving party
from a third party under no obligation of confidentiality; (4) is independently
invented by the receiving party without reference to the disclosed Confidential
Information; or (5) the receiving party receives prior written consent from the
disclosing party for disclosure of certain Confidential Information to a third
party.
C. Standard of Care. The receiving party shall hold in confidence and
protect the disclosed Confidential Information by using the same degree of care
as they would use to protect their own Confidential Information, but no less
than a reasonable degree of care, to prevent unauthorized use, dissemination,
or publication of the Confidential Information. The parties hereto agree that
there is a duty to promptly advise the disclosing party of any unauthorized
disclosure or use of Confidential Information. The receiving party agrees the
damages to the disclosing party for improper disclosure of Confidential
Information will result in irreparable harm to the disclosing party and that
therefore the disclosing party will be entitled to equitable relief, including
but not limited to injunctive relief. Notwithstanding, the receiving party shall
not be liable for any disclosure resulting from the sale of any physical product
or component; further, the receiving party may disclose the other party's
Confidential Information to the receiving party's Affiliates, Suppliers or
consultants where necessary for the manufacture, use or sale of products by the
receiving party so long as a suitable non-disclosure agreement has been signed
between such parties which has substantially similar terms as this Paragraph
XIV.
D. Confidentiality Period. The parties agree that Confidential
Information shall be maintained in confidence by the receiving party for a
period of five (5) years from the date of first disclosure to the receiving
party by the disclosing party and shall not be used by the receiving party
except in furtherance of this the rights and licenses granted pursuant to this
Agreement.
E. Early Termination & Return of Confidential Information. In the event
this Agreement is terminated for any reason and upon a request by a disclosing
party, the receiving party will promptly return or certify the destruction of
all Confidential Information it received from the disclosing party along with
all copies made by the receiving party. Upon such a request, the disclosing
party's Confidential Information contained on data storage media shall be
certified as being deleted therefrom.
Page 10 of 21
<PAGE>
F. Promotional Materials. The parties hereto shall consult with each
other from time to time and mutually approve promotional materials, including
samples, technical data, or otherwise containing any proprietary and/or
confidential information of the parties, for disclosure to customers by either
party or jointly under a mutually agreeable and reciprocal non-disclosure
agreement.
G. Breach of Confidentiality. Breach of this Paragraph XIV by either
party shall be deemed sufficient cause for the other party to terminate any
further obligation to make confidential disclosures to the breaching party
without limiting any other remedy at law. If such a breach occurs, the non-
breaching party shall send a written notification to the breaching party. The
breaching party will then have thirty (30) days from the mailing date of the
notification within which to mitigate the effects of the wrongful disclosure
amounting to a breach hereunder. If such actions are sufficient to mitigate the
effects of the wrongful disclosure, the obligation of the non-breaching party to
make confidential disclosures shall resume.
H. Employee Agreements. Both parties hereto represent that all of their
employees, including contract employees, shall have executed agreements
obligating such employees to assign ideas and inventions to their respective
employer prior to having access to Confidential Information received hereunder.
I. Superceding Prior Confidentiality Terms. This supersedes all prior
written or oral understandings or agreements with respect to non-disclosure or
confidentiality issues.
XV. Indemnity
A. Licensee agrees to defend, indemnify and hold Tessera harmless from
and against any and all damages, liabilities, costs and expenses (including
reasonable attorney's fees and expenses) arising out of or related to Licensee's
use of Tessera Patents or Technical Information. Notwithstanding, Licensee shall
not bear the obligation or expense of defending the validity of any Tessera
Patent. Tessera shall have sole control over and bear the expense for so
defending the validity of the Tessera Patents.
B. Tessera agrees to defend, indemnify and hold Licensee harmless from
and against any and all damages, liabilities, costs and expenses (including
reasonable attorney's fees and expenses) arising out of or related to Tessera's
use of Licensee Improvements. Notwithstanding, Tessera shall not bear the
obligation or expense of defending the validity of any Licensee Patent. Licensee
shall have sole control over and bear the expense for so defending the validity
of the Licensee Patents.
XVI. Miscellaneous
The following additional terms shall apply to this Agreement:
A. Governing Law. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of California, irrespective
of choice of laws provisions. Both parities shall use reasonable efforts to
resolve by mutual agreement any disputes, controversies,
Page 11 of 21
<PAGE>
claims or difference which may arise from, under, out of or in connection with
this Agreement. If such disputes, controversies, claims or differences cannot be
settled between the parties, any litigation between the parties relating to this
Agreement shall take place in San Jose, California. The parties hereby consent
to personal jurisdiction and venue in the state and federal courts of
California.
B. No Waiver. Any waiver, express or implied, by either of the parties
hereto of any right hereunder or default by the other party, shall not
constitute or be deemed a continuing waiver or a waiver of any other right or
default. No failure or delay on the part of either party in the exercise of any
right or privilege hereunder shall operate as waiver thereof, nor shall any
single or partial exercise of such right or privilege preclude other or further
exercise thereof or any other right or privilege.
C. Equitable Relief: Nothing herein shall preclude either party from
taking whatever actions are necessary to prevent immediate, irreparable harm to
its interests. Otherwise, these procedures are exclusive and shall be fully
exhausted prior to the initiation of any litigation.
D. Notices. All notices, required documentation, and correspondence in
connection herewith shall be in the English language, shall be provided in
writing and shall be given by facsimile transmission or by registered or
certified letter to Tessera and Licensee at the addresses and facsimile numbers
set forth below:
Tessera: Tessera, Inc.
3099 Orchard Dr.
San Jose, California 95134
Facsimile No.: 408-894-0768
Attn.: Chief Executive Officer
Licensee: ChipPAC, Inc.
3151 Coronado Drive
Santa Clara, CA 95054
Facsimile No.: 408-486-5911
Attn.: President
Either Party may change its address and/or facsimile number by giving the
other party notice of such new address and/or facsimile number. All notices if
given or made by registered or certified letter shall be deemed to have been
received on the earlier of the date actually received and the date three days
after the same was posted and if given or made by facsimile transmission shall
be deemed to have been received at the time of dispatch, unless such date of
receipt is not a business day, in which case the date of deemed receipt shall be
the next succeeding business day.
E. Documentation Managers. Both Licensee and Tessera shall designate a
Documentation Manager to perform the task of logging and tracking the
confidential documents transferred between the companies. If possible, each
transfer of confidential information should be first transferred between the
respective Documentation Managers before disclosure in a meeting or via
mail/fax. If the information is first disclosed between representatives of the
parties, an effort
Page 12 of 21
<PAGE>
should be made to send a copy of the disclosed information to the receiving
party's Documentation Manager along with the date of the disclosure. Tessera's
Documentation Manager is Christopher M. Pickett, Director of Intellectual
Property and may be contacted at the Tessera fax and street address. Licensee's
Documentation Manager is Dave Tovar, Director of Substrate Products and may be
contacted at the Licensee fax and street address. Either party may change its
Documentation Manager or the associated address and/or facsimile number by
giving the other party notice of such new information.
F. Invalidity. If any provision of this Agreement is declared invalid or
unenforceable by a court having competent jurisdiction, it is mutually agreed
that this Agreement shall endure except for the part declared invalid or
unenforceable by order of such court. The parties shall consult and use their
best efforts to agree upon a valid and enforceable provision which shall be a
reasonable substitute for such invalid or unenforceable provision in light of
the intent of this Agreement.
G. Assignment. Neither party may assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of the other
party.
H. Export Regulations. Both parties shall comply with the laws and
regulations of the government of the United States and of any other country as
relevant to each party hereto relating to the export of commodities and
technical data.
L. Section Headings. The headings and captions used herein shall not be
used to interpret or construe this Agreement.
K. Entire Understanding. This Agreement embodies the entire understanding
between the parties relating to the subject matter hereof, whether written or
oral, and there are no prior representations, warranties or agreements between
the parties not contained in this Agreement. Any amendment or modification of
any provision of this Agreement must be in writing, dated and signed by both
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
TESSERA, INC. CHIPPAC, INC. (Company Name)
-------------------
By: /s/ John W. Smith By: /s/ Dennis McKenna
--------------------------- -----------------------------
Print Name: John W. Smith Print Name: Dennis McKenna
------------------ ---------------------
Title: President Title: President/CEO
------------------------ --------------------------
Date: 12/22/98 Date: 12/23/98
------------------------- ---------------------------
Page 13 of 21
<PAGE>
Attachment A
PATENTS
- -------
PATENT NO. TITLE
---------- -----
5,148,265 SEMICONDUCTOR CHIP ASSEMBLIES WITH FAN-IN LEADS
5,148,266 SEMICONDUCTOR CHIP ASSEMBLIES AND METHODS OF MAKING SAME
5,258,330 SEMICONDUCTOR CHIP ASSEMBLIES WITH FAN-IN LEADS
5,346,861 SEMICONDUCTOR CHIP ASSEMBLIES AND METHODS OF MAKING SAME
5,347,159 SEMICONDUCTOR CHIP ASSEMBLIES WITH FACE-UP MOUNTING AND
REAR-SURFACE CONNECTION TO SUBSTRATE
5,390,844 SEMICONDUCTOR INNER LEAD BONDER TOOL
5,398,863 SHAPED LEAD STRUCTURE AND METHOD
5,414,298 SEMICONDUCTOR CHIP ASSEMBLIES AND COMPONENTS WITH PRESSURE
CONTACT
5,477,611 METHOD OF FORMING INTERFACE BETWEEN DIE AND CHIP CARRIER
5,489,749 SEMICONDUCTOR CONNECTION COMPONENTS AND METHODS WITH
RELEASABLE LEAD SUPPORT
5,491,302 MICROELECTRONIC BONDING WITH LEAD MOTION
5,525,545 SEMICONDUCTOR CHIP ASSEMBLIES AND COMPONENTS WITH PRESSURE
CONTACT
5,536,909 SEMICONDUCTOR CONNECTION COMPONENTS AND METHODS WITH
RELEASABLE LEAD SUPPORT
5,548,091 SEMICONDUCTOR CHIP CONNECTION COMPONENTS WITH ADHESIVES FOR
BONDING TO THE CHIP
5,597,470 METHOD OF MAKING A FLEXIBLE LEAD FOR A MICROELECTRONIC
DEVICE
Page 14 of 21
<PAGE>
[Redacted]
FOREIGN PATENTS
- ---------------
PATENT NO. TITLE
---------- -----
5,619,017 MICROELECTRONIC BONDING WITH LEAD MOTION
5,629,239 MANUFACTURE OF SEMICONDUCTOR CONNECTION COMPONENTS WITH
FRANGIBLE LEAD SECTIONS
5,659,952 METHOD FOR FABRICATING COMPLIANT INTERFACE FOR A
SEMICONDUCTOR CHIP
5,663,106 METHOD OF ENCAPSULATING DIE AND CHIP CARRIER
5,679,194 FABRICATION OF LEADS ON SEMICONDUCTOR CONNECTION COMPONENTS
5,679,977 SEMICONDUCTOR CHIP ASSEMBLIES, METHODS OF MAKING SAME AND
COMPONENTS FOR SAME
5,682,061 COMPONENT FOR CONNECTING A SEMICONDUCTOR CHIP TO A
SUBSTRATE
5,685,885 WAFER-SCALE TECHNIQUES FOR FABRICATION OF SEMICONDUCTOR
CHIP ASSEMBLIES
5,706,174 COMPLIANT MICROELECTRONIC MOUNTING DEVICE
5,766,987 MICROELECTRONIC ENCAPSULATION METHODS AND EQUIPMENT
5,776,796 METHOD OF ENCAPSULATING A SEMICONDUCTOR PACKAGE
5,777,379 SEMICONDUCTOR ASSEMBLIES WITH REINFORCED PERIPHERAL REGIONS
5,787,581 METHODS OF MAKING SEMICONDUCTOR CONNECTION COMPONENTS WITH
RELEASABLE LOAD SUPPORT
5,801,446 MICROELECTRONIC CONNECTIONS WITH SOLID CORE JOINING UNITS
5,807,453 FABRICATION OF LEADS ON SEMICONDUCTOR CONNECTION COMPONENTS
FOREIGN PATENTS
- ---------------
PATENT NO. TITLE
---------- -----
121621 SEMICONDUCTOR CHIP ASSEMBLIES AND METHODS OF
Page 15 of 21
<PAGE>
(South Korea) MAKING SAME AND COMPONENTS FOR SAME
PATENT APPLICATIONS
- -------------------
SERIAL NO. TITLE
---------- -----
2,091,438 SEMICONDUCTOR CHIP ASSEMBLIES AND METHODS OF MAKING SAME
AND COMPONENTS FOR SAME
91918245.1 SEMICONDUCTOR CHIP ASSEMBLIES AND METHODS OF MAKING SAME
AND COMPONENTS FOR SAME
51695/91 SEMICONDUCTOR CHIP ASSEMBLIES AND METHODS OF MAKING SAME
AND COMPONENTS FOR SAME
374,559 SEMICONDUCTOR CONNECTION COMPONENTS AND METHODS WITH
RELEASABLE LEAD SUPPORT
6-504706 SEMICONDUCTOR CONNECTION COMPONENTS AND METHODS WITH
RELEASABLE LEAD SUPPORT
95-700249 SEMICONDUCTOR CONNECTION COMPONENTS AND METHODS WITH
RELEASABLE LEAD SUPPORT
[redacted*]
7-505301 SEMICONDUCTOR INNER LEAD BONDER TOOL
855,127 SEMICONDUCTOR CHIP ASSEMBLIES, METHODS OF MAKING SAME AND
COMPONENTS FOR SAME
861,280 SEMICONDUCTOR CHIP ASSEMBLIES, METHODS OF MAKING SAME AND
COMPONENTS FOR SAME
[redacted*]
110,527 SEMICONDUCTOR CHIP ASSEMBLIES, METHODS OF MAKING SAME AND
COMPONENTS FOR SAME
94924580.7 METHOD OF FORMING INTERFACE BETWEEN DIE AND CHIP CARRIER
7-509750 METHOD OF FORMING INTERFACE BETWEEN DIE AND CHIP CARRIER
* Confidential Treatment requested.
Page 16 of 21
<PAGE>
Tessera Confidential
- --------------------
95-701989 METHOD OF FORMING INTERFACE BETWEEN DIE AND CHIP
CARRIER
7-505309 SHAPED LEAD STRUCTURE AND METHOD
658,577 SEMICONDUCTOR CHIP CONNECTION COMPONENTS WITH ADHESIVES
FOR BONDING TO THE CHIP
[redacted*]
[redacted*]
95932549.9 MICROELECTRONIC BONDING WITH LEAD MOTION
97-701646 MICROELECTRONIC BONDING WITH LEAD MOTION
9-511028 MICROELECTRONIC BONDING WITH LEAD MOTION
365,749 COMPLIANT INTEGRATED CIRCUIT PACKAGE AND METHOD
THEREFOR
019,637 MICROELECTRONIC CONNECTIONS WITH SOLID CORE JOINING
UNITS
807,470 MANUFACTURE OF SEMICONDUCTOR CONNECTION COMPONENTS WITH
FRANGIBLE LEAD SECTIONS
[redacted*]
95933164.6 COMPLIANT INTERFACE FOR A SEMICONDUCTOR CHIP
97-701682 COMPLIANT INTERFACE FOR A SEMICONDUCTOR CHIP
9-511045 COMPLIANT INTERFACE FOR A SEMICONDUCTOR CHIP
020,613 METHODS OF MAKING SEMICONDUCTOR ASSEMBLIES WITH
REINFORCED PERIPHERAL REGIONS
[redacted*]
[redacted*]
8-533523 FABRICATION OF LEADS ON SEMICONDUCTOR CONNECTION
COMPONENTS
*Confidential Treatment requested.
Page 17 of 21
<PAGE>
Tessera Confidential
- --------------------
012,079 MICROELECTRONIC ENCAPSULATION METHODS AND EQUIPMENT
705,309 STACKED CHIP ASSEMBLY
709,127 LATERALLY SITUATED STRESS/STRAIN RELIEVING LEAD FOR
A SEMICONDUCTOR CHIP PACKAGE
[redacted*]
560,272 STRUCTURE AND METHOD FOR MAKING A COMPLIANT LEAD FOR
A MICROELECTRONIC DEVICE
610,610 METHODS FOR PROVIDING VOID FREE LAYERS FOR SEMI-
CONDUCTOR ASSEMBLIES
[redacted*]
PCT/DS97/03273 METHOD OF ENCAPSULATING A SEMICONDUCTOR PACKAGE
630,375 SEMICONDUCTOR INNER LEAD BONDER TOOL
989,368 COMPLIANT WIREBOND PACKAGE
[redacted*]
947,180 BONDING LEAD STRUCTURE WITH ENHANCED ENCAPSULATION
[redacted*]
845,786 METHOD OF MAKING CHIP MOUNTINGS AND ASSEMBLIES
[redacted*]
[redacted*]
[redacted*]
[redacted*]
* Confidential Treatment requested.
Page 18 of 21
<PAGE>
Tessera Confidential
- --------------------
[redacted*]
[redacted*]
[redacted*]
[redacted*]
931,680 MULTIPLE PART COMPLIANT INTERFACE FOR PACKAGING OF A
[redacted*]
[redacted*]
[redacted*]
[redacted*]
086,863 SEMICONDUCTOR CHIP PACKAGE WITH DUAL LAYER TERMINAL
AND LEAD STRUCTURE
978,082 MICROELECTRONIC COMPONENT WITH RIGID INTERPOSER
[redacted*]
[redacted*]
[redacted*]
* Confidential Treatment requested.
Page 19 of 21
<PAGE>
Tessera Confidential
- --------------------
Attachment B
ROYALTY REPORT UNDER TESSERA TCC LICENSE AGREEMENT
Reporting Period: From _____________ through _______________
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF ROYALTY ROYALTY
CUSTOMER TCC PACKAGES BILLABLE PINS RATE (US$)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
TOTAL ROYALTY: US$________________
LESS TAX: US$________________
ACTUAL REMITANCE: US$________________
Page 20 of 21
<PAGE>
Attachment C
Minimum IC Package Requirements
for Use of the Tessera Marks
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
DEMONSTRATED
RELIABILITY
TEST REFERENCE (UNITS FAILED/
NO. TEST ITEM TEST CONDITION STANDARDS TOTAL UNITS)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I Moisture/Pre- Moisture Soak: JEDEC Sample = 45 pcs.
conditioning Test 30(degrees)/60% RH, 192 Hours JESD22-A113 LTPD = 5%
Reflow 3 times: Convection, LEVEL 3 (0/45)
** 10 seconds at 210-220(degrees)C, -
Flux clean in aqueous solution
- -----------------------------------------------------------------------------------------------------------------------
2* Pressure Cooker Ta = 121(degrees)C, 100 RH, 2 atm., MIL-STD- 168 hours/2,3/
Test No Bias 883:1004 (0/45)
- -----------------------------------------------------------------------------------------------------------------------
3* High Temp. Ta = 150(degrees)C, No Bias MIL-STD- 1000 hours/2/
Storage Test 883:1008 (0/45)
- -----------------------------------------------------------------------------------------------------------------------
4* On FR-4 Board Ta = -55(degrees)C (15 minutes) to MIL-STD- 750 cycles/2/
Temperature 125(degrees)C (15 minutes), 883:1010 (0/45)
Cycling Test Gas Phase
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES:
* Needs Preconditioning (Test No. 1)
/1/ Electrical opens test (at 100(degrees) C) and visual inspection
/2/ Discoloration of solder mask due to temperature exposure allowed
/3/ Leakage due to tin migration on polyimide allowed
RH = Relative Humidity
LTPD = Lot Tolerance Percent Defective
** greater than
Page 21 of 21
<PAGE>
Exhibit 10.12.1
ChipPAC, Inc. Hyundai Electronics America ChipPAC Limited
3151 Coronado Drive 3101 North First Street Craigmuir Chambers
Santa Clara, CA 95054 San Jose, CA, 95054 Road Town, Tortola
British Virgin Islands
July 15, 1999
Tessera, Inc.
3099 Orchard Drive
San Jose, California 95134
Attention: Chief Executive Officer
Re: TCC License Agreement dated December 22, 1998, as amended
between Tessera, Inc. and the Tessera Affiliates and
ChipPAC, Inc. and the Licensee Affiliates (the "Agreement")
Ladies and Gentlemen:
Hyundai Electronics Industries Co., Ltd. and Hyundai Electronics America
(collectively, "Hyundai") have entered into an agreement pursuant to which
ChipPAC, Inc. shall be recapitalized (the "Recapitalization"). As a result of
the Recapitalization, (i) an equity investor group led by Bain Capital and
Citicorp Venture Capital, together with ChipPAC management, will own the
majority of ChipPAC's equity and (ii) all of ChipPAC's sales, marketing and
licensing activities will be conducted by ChipPAC Limited, ChipPAC's newly
established British Virgin Islands subsidiary (which will also own the stock of
ChipPAC's Korean and Chinese operating subsidiaries).
Following the consummation of the Recapitalization, ChipPAC will be the
second largest independent provider of semiconductor packaging and test services
to the semiconductor industry. ChipPAC provides packaging and test services to
some of the world's largest and most prominent semiconductor manufacturers. A
number of ChipPAC's customers and suppliers have already been notified of the
proposed transaction and have been encouraging and supportive.
We anticipate consummating the Recapitalization on or about July 29, 1999.
In order to facilitate the orderly progression of the Recapitalization, it is
desirable that ChipPAC, Inc. transfer its rights and obligations under the
Agreement to Hyundai Electronics America and that Hyundai Electronics America
immediately transfer its rights and obligations under the Agreement to ChipPAC
Limited.
We would appreciate it if you would execute and return the enclosed copy of
this letter by July 22, 1999 as evidence that, effective upon the consummation
of the Recapitalization pursuant to that certain Agreement and Plan of
Recapitalization and Merger dated as of March 13, 1999, as amended, by and among
Hyundai, ChipPAC, Inc. and ChipPAC Merger Corp., you consent to (i) the transfer
of all of ChipPAC, Inc.'s rights and obligations under the Agreement to Hyundai
Electronics America and to the transfer immediately thereafter by Hyundai
Electronics America of all such rights and obligations under the Agreement to
ChipPAC Limited and (ii) the collateral security assignment by ChipPAC Limited
of its rights under the Agreement to any of its financing
<PAGE>
Tessera, Inc. July 15, 1999
Consent - Page 2
sources, notwithstanding in either case, any provision to the contrary in the
Agreement which may otherwise prohibit or restrict such transfers. From and
after the effectiveness of the transfer of such rights and obligations under the
Agreement to ChipPAC Limited, ChipPAC Limited shall assume each of ChipPAC,
Inc.'s obligations pursuant to the Agreement and shall be bound by all of the
terms and conditions of the Agreement that by their terms apply to ChipPAC,
Inc., and Hyundai Electronics America shall have no rights, obligations or
liabilities thereunder. In no event shall Hyundai be liable to Tessera, Inc. or
the Tessera Affiliates for any breach or damages caused by ChipPAC Limited in
connection with or arising out of the Agreement.
We anticipate providing you notice of the consummation of the
Recapitalization shortly after the closing thereof. Please contact Dennis
McKenna of ChipPAC at (408) 486-5901, Baxon S. Kim of Hyundai Electronics
America at (408) 232-8203 and Rod J. Howard of Brobeck, Phleger & Harrison LLP,
counsel to Hyundai Electronics, at (650) 812-2596, with any questions concerning
this letter.
Very truly yours,
ChipPAC, Inc.
By: /s/ Dennis McKenna
-----------------------------------
Its: PRESIDENT/CEO
-----------------------------------
Hyundai Electronics America
By: /s/ Dr. C.S. Park
-----------------------------------
Its: President & CEO
-----------------------------------
ChipPAC Limited
By: /s/ Richard Parsons
-------------------------------------
RICHARD PARSONS, for WESTLAND LIMITED
Its: DIRECTOR
-----------------------------------
Agreed to as of this 29 day of July, 1999.
Tessera, Inc.
By: /s/ Bruce McWilliams
---------------------
Its: President & CEO
---------------------
July 29, 1999
<PAGE>
EXHIBIT 10.13
Intel/ChipPAC Confidential
CHIPPAC LIMITED and INTEL CORPORATION
MATERIALS AGREEMENT
This Agreement (the "Agreement") is entered into as of July 1, 1999 (the
"Effective Date) by and between ChipPAC Limited, a British Virgin Islands
company, having a place of business at Craigmuir Chambers, Road Town, Tortola,
British Virgin Islands and its subsidiaries (hereinafter "Company"), and Intel
Corporation, a Delaware corporation, having its principal place of business at
2200 Mission College Blvd., Santa Clara CA 95052 and its subsidiaries
(hereinafter "Intel"). Company and Intel are sometimes referred to as a "Party"
and collectively referred to as the "Parties".
RECITALS
WHEREAS, Intel has agreed to purchase, and ChipPAC, Inc., the parent company of
the Company, has agreed to sell, certain ChipPAC, Inc. securities (the
"Investment") subject to the terms and conditions set forth in that certain
Stock Purchase Agreement dated as of July __, 1999 (the "Stock Purchase
Agreement"); and
WHEREAS, the Parties have previously entered into an Assembly Services
Agreement/Corporate Purchase Agreement No. 0995ELR001, dated 199_, between
Hyundai Electronics America, Hyundai Electronics Industries Co., Ltd. and
ChipPAC, Inc. and the Parties are in the process of novation of such agreement
and replacement with a comparable agreement between ChipPAC Limited and Intel
(the "CPA"), and this Agreement is intended to be an addendum to the CPA and to
amend, modify and supplement such CPA;
NOW, THEREFORE, for good and valuable consideration, including the
investment by Intel pursuant to the Stock Purchase Agreement, the receipt and
sufficiency of which is acknowledged, the Parties agree as follows:
AGREEMENT
1. CONSTRUCTION AND DEFINITIONS
1.1 Construction. All references in this Agreement to "Sections" refer to
------------ --------
the sections of this Agreement. As used in this Agreement, neutral pronouns and
any variations thereof shall be deemed to include the feminine and masculine and
all terms used in the singular shall be deemed to include the plural, and vice
versa, as the context may require. The words "hereof," "herein" and "hereunder"
------ ------ ---------
and other words of similar import refer to this Agreement as a whole, as the
same may from time to time be amended or supplemented, and not to any
subdivision contained in this Agreement. The word "including" when used herein
---------
is not intended to be exclusive and means "including, without limitation." This
-----------------------------
Agreement shall be construed without regard to any presumption or other rule
requiring construction hereof against the Party causing this Agreement to be
drafted.
1.2 Definitions. As used in this Agreement, the following capitalized
-----------
terms have the meanings provided below:
(a) Upside Capacity means the right as set forth in this Agreement to
direct a portion of the Capacity for purchase by Intel.
(b) Capacity means that Company will establish and maintain manufacturing
facilities capable of producing Products in sufficient quantity to meet the
current and forecasted acquisition needs of Intel. Any forecasts of future
requirements which may be provided by Intel to Company are estimates only and
shall be non-binding upon Intel.
<PAGE>
(c) Intellectual Property Rights shall mean any or all of the following
and all rights in, arising out of, or associated therewith: (i) all United
States and foreign patents and utility models and applications therefor and all
reissues, divisions, renewals, reexaminations, extensions, provisionals,
continuations and continuations-in-part thereof, and equivalent or similar
rights anywhere in the world in inventions and discoveries ("Patents"); (ii) all
trade secrets, know how and proprietary information; (iii) all copyrights,
copyrights registrations and applications therefor and all other rights
corresponding thereto throughout the world ("Copyrights"); (iv) all mask works,
mask work registrations and applications therefor, and any equivalent or similar
rights in semiconductor masks, layouts, architectures or topology ("Maskworks");
(v) all industrial designs and any registrations and applications therefor
throughout the world; (vi) all trade names, logos, trade dress, domain names,
common law trademarks and service marks, trademark and service mark
registrations and applications therefor and all goodwill associated therewith
throughout the world ("Trademarks"); and (vii) any similar, corresponding or
equivalent rights to any of the foregoing anywhere in the world, including but
not limited to Computer Program Rights and Registrations and applications
therefor.
(d) Product(s) means those products or services described in the CPA or
any related Purchase Order Release issued under the CPA by Intel to Company,
including any referenced drawing or specification for such product or service.
(e) Technology shall mean any or all of the following (i) works of
authorship including, without limitation, computer programs, source code and
executable code, whether embodied in software, firmware or otherwise,
documentation, designs, flow charts, specifications, logic diagrams, programmer
notes, protocols, files, records, data and mask works, (ii) inventions (whether
or not patentable), improvements, and technology, (iii) proprietary and
confidential information, including technical data and customer and supplier
lists, trade secrets and know how, (iv) databases, data compilations and
collections and technical data, (v) tools, methods and processes, and all
instantiations of the foregoing in any form and embodied in any media.
(f) Term shall have the meaning set forth in Section 11.2.
2. PRODUCT PRICING
2.1 Price Negotiation. The Parties agree to enter into periodic price
-----------------
negotiations with the intent of achieving the most competitive pricing of the
Products supplied by Company to Intel, [redacted*].
2.2 [redacted*]
* Confidential treatment requested.
-2-
<PAGE>
2.3 [redacted*]
2.4 [redacted*]
3. PRODUCTION CAPACITY
3.1 [redacted*]
3.2 [redacted*]
3.3 Priority Product Re-Qualification. In the event Company changes its
---------------------------------
components or component vendors based upon cost considerations and such change
necessitates re-qualification of Products, Intel agrees to prioritize the re-
qualification process of such Products, unless the Parties agree that there is
insufficient payback for such re-qualification effort.
4. TECHNOLOGY TRANSFERS
* Confidential treatment requested.
-3-
<PAGE>
4.1 [redacted*]
(a) Copyright License. A non-exclusive, world-wide, irrevocable, non-
-----------------
transferable, fully paid up, royalty free, perpetual license (without the
right to transfer or sublicense except as set forth in "c" below) to
reproduce and, prepare derivative works of, publicly perform, publicly
display and distribute the Technology and derivative works thereof to third
parties through incorporation in an Intel product manufactured using, or
derived from the Technology;
(b) Other Intellectual Property Licenses. A non-exclusive, world-wide,
------------------------------------
irrevocable, nontransferable, fully paid up, royalty free, perpetual
license (without the right to transfer or sublicense except as set forth in
"c" below) under all Intellectual Property Rights now or later owned or
controlled by Company to make, use, sell, distribute, offer for sale, and
import the Technology and derivative works thereof pursuant to Intel's
exercise of the rights granted to it in the copyright licenses under
Section 4(a) of this Agreement;
(c) [redacted*]
4.2 [redacted*]
5. ROADMAP REVIEWS
The parties shall conduct quarterly roadmap reviews to evaluate Company
technology roadmaps against the requirements of Intel business groups. Session
will also be used to address cost reduction opportunities or programs, and
qualification of any new Company sites, including Shanghai. Synergy activities
toward mutually used technologies will also be addressed in this forum.
6. [redacted*]
*Confidential treatment requested.
-4-
<PAGE>
7. AUDIT
7.1 Audit Rights of Intel. For purposes of this Agreement only, and not
---------------------
in derogation of any other audit provision which may exist between the Parties,
during the Term, Company will maintain complete and accurate records required
by its performance under this Agreement, including Product pricing. Upon thirty
(30) days written notice and not more often than twice per calendar year, Intel
may audit Company's books and records to ensure Company's compliance with the
terms and conditions of this Agreement. At Intel's option or upon Company's
written demand, such audit will be performed by an independent third party at
Intel's expense; provided, however, if any audit reveals that Company is not
materially complying with the terms of this Agreement, Company shall pay the
costs of such audit. The auditor shall keep the results of such audit
confidential, and, if conducted by a third party, any failure by Company to
abide by the obligations of this Agreement shall be reported to Intel. At the
end of the Term, Intel shall have the option of conducting a final end-of-term
audit; if Intel does not avail itself of this option within thirty (30) days of
the end of the Term, such option shall expire.
7.2 Certification of Intel Provided Information. Intel shall provide
-------------------------------------------
Company's independent third party auditors such information as will reasonably
substantiate the [redacted*] required by Section 3.2. Such information shall be
retained as confidential and such auditors may inform Company of its
professional opinion regarding Intel's compliance or non-compliance with the
provisions of Section 3.2. No other use of the information may be made by such
auditors. Additionally, Intel agrees that, prior to submission of a request for
quotation by Intel, the Intel Finance Department will certify the accuracy of
representations regarding Product pricing quotations from competitors which are
made by Intel pursuant to Section 2.3.
8. OWNERSHIP
8.1 Company Technology. Company shall own all right, title and interest in
------------------
and to any Technology it solely develops in the course of performance of this
Agreement not using Confidential Information of Intel (other than residuals) or
develops independent of this Agreement, including all Intellectual Property
Rights therein.
8.2 Intel Technology. Intel shall own all right, title and interest in
----------------
and to any Technology that it solely develops in the course of performance of
this Agreement not using Confidential Information of Company (other than
residuals) or develops independent of this Agreement, including all
Intellectual Property Rights therein.
9. CONFIDENTIALITY
9.1 Confidentiality Information. Confidential Information is any information
---------------------------
disclosed by one Party to the other in connection with this Agreement, which the
disclosing Party believes to include confidential information, is designated
with an appropriate legend such as "CONFIDENTIAL" (or other label indicating its
confidential nature or status) at the time of disclosure if in documentary or
other tangible form, and if such disclosure is initially oral or visual and not
reduced to written or documentary form at the time of disclosure, is identified
as confidential at the time of disclosure, summarized or identified in a written
document that is marked with an appropriate legend indicating its confidential
status, and provided to the other Party within twenty (20) days following such
oral or visual disclosure. For each item of Confidential Information, the Party
disclosing the item shall be called the "Disclosing Party," and the Party
receiving the item shall be called the "Receiving Party."
9.2 Confidentiality Obligation. The Receiving Party shall hold all
--------------------------
Confidential Information of the Disclosing Party in trust and confidence, and
protect it as the Receiving Party would protect its own confidential
information (which, in any event, shall not be less than reasonable protection)
and shall not use such Confidential Information for any purpose other than that
contemplated by this Agreement. Unless agreed by the Disclosing Party in
writing, the Receiving Party shall not disclose any Confidential Information of
the Disclosing Party, by publication or otherwise, to any person other than
employees, officers or directors who (i) are bound to written confidentiality
obligations consistent with and at least as restrictive as those set forth
herein and (ii) have a need to know such Confidential Information for purposes
of enabling a Party to exercise its rights and perform
*Confidential treatment requested.
-5-
<PAGE>
its obligations pursuant to this Agreement Confidential Information shall remain
confidential information until such time as it qualifies for non-confidential
treatment pursuant to any exception in Section 9.3. Exceptions
9.3 Exception. The obligations specified in Section 9.2 shall not
---------
apply to any Confidential Information to the extent that the Receiving Party can
demonstrate that such Confidential Information: (a) it is already known to the
Receiving Party without restriction prior to the time of disclosure by the
Disclosing Party; (b) it is acquired by the Receiving Party from a third party
without confidentiality restriction and does not originate with the Disclosing
Party; (c) it is independently developed or acquired by the Receiving Party by
employees or contractors without access to such Confidential Information; (d) it
is approved for release by written authorization of the Disclosing Party; (e) it
is in the public domain at the time it is disclosed or subsequently falls within
the public domain through no wrongful action of the Receiving Party; or (f) it
is furnished to a third party by the Disclosing Party without a similar
restriction on that third party's right of disclosure. In addition, the
obligations specified in Section 9.2 shall not prohibit Company from disclosing
the general existence of this Agreement (i.e. describing that Company has a TAM
agreement with Intel) and a general description of its primary provisions to a
potential investor in a private placement memorandum or prospectus seeking debt
or equity financing or if required by applicable statute. Such disclosure, in
any event, is subject to and conditional upon Intel's right, in its reasonable
discretion, to review and edit the private placement memorandum or prospectus or
statutorily required disclosure, including deletions of text, prior to any such
disclosure.
9.4 Compelled Disclosure. Notwithstanding the foregoing, a Receiving
--------------------
Party may disclose Confidential Information if it is disclosed pursuant to the
requirement of a governmental agency or disclosure is permitted or required by
operation of law, provided that the Receiving Party use its best efforts to
notify the Disclosing Party in advance of such disclosure and seeks confidential
treatment for such Confidential Information.
9.5 Residual Information. The restrictions regarding Confidential
--------------------
Information shall not apply to one Party's use of the Residuals from the other
Party's Confidenfial Information. The term "Residuals" as used in this paragraph
---------
shall mean the Confidential Information in intangible form (i.e., not in written
or other documentary form, including tape or diskette) which may be retained by
those employees of Company or Intel who have had access to the other's
Confidential Information, including ideas, concepts, know-how, or techniques
contained therein. Neither Party shall have any obligation to limit or restrict
the assignment of such employees or to pay royalties for any work resulting from
the use of such Residuals.
10. WARRANTIES AND DISCLAIMERS
10.1 General Warranty. Each Party hereby represents and warrants to the
----------------
other that: (i) all corporate action on the part of such Party, its officers,
directors and shareholders necessary for the authorization of this Agreement and
the performance of all obligations of such Party hereunder has been taken; and
(ii) this Agreement, when executed and delivered, will be a valid and binding
obligation of such Party enforceable in accordance with its terms.
10.2 No Conflict. Each Party hereby represents and warrants to the other
-----------
that such Party's making of this Agreement and performance hereunder does not
and will not violate any agreement existing between such Party and any third
party.
11. EFFECTIVE DATE, TERM, TERMINATION AND CANCELLATION.
11.1 Effective Date. Notwithstanding the Effective Date of July 1, 1999,
--------------
this Agreement shall not become effective unless and until Company has 1)
executed the Stock Purchase Agreement and ancillary agreements, and 2) Company
has consummated the transactions contemplated in the Stock Purchase Agreement
and ancillary agreements. Upon the occurrence of these conditions, this
Agreement shall be in full force and effect retroactive to the Effective Date.
-6-
<PAGE>
11.2 Agreement Term. This Agreement shall commence on the Effective Date
--------------
and shall terminate [redacted*] thereafter (the "Term"), unless earlier
terminated as provided below or extended by mutual agreement of the Parties. The
Term of the CPA is hereby extended to be coterminous with this Agreement.
11.3 Termination by Either Party. Either Party shall have the right to
---------------------------
terminate this Agreement under the following conditions: (a) mutual agreement
between the Parties; and (b) upon sixty (60) days notice for any material breach
of this Agreement by the other Party which breach is not cured within such sixty
(60) day period.
11.4 Termination of CPA. In the event the CPA is terminated pursuant to
------------------
its terms, this Agreement shall likewise terminate concurrent with the CPA
termination date.
11.5 Survival. Each Party's obligations to pay any amount due and owing
--------
and to deliver and accept any Product(s) ordered prior to the CPA and Sections
1, 4, 7, 8, 9 and 12.3 of this Agreement shall survive the expiration or
termination of this Agreement.
12. MISCELLANEOUS
12.1 Merger, Modification, Waiver. Except for the other applicable
----------------------------
documents mentioned below and the CPA, this Agreement contains the entire
understanding between Intel and Company with respect to the subject matter
hereof, and merges, and supersedes all prior and contemporaneous agreements,
dealings and negotiations. No modification, alteration or amendment shall be
effective unless made in writing, dated and signed by duly authorized
representatives of both parties. No waiver of any breach hereof shall be held to
be a waiver of any other or subsequent breach.
12.2 Other Applicable Documents. This Agreement shall incorporate by
--------------------------
reference the following additional terms: Attachment A, [redacted*] and any
amendments or additions thereto.
12.3 [redacted*]
12.4 Jurisdiction and Choice of Law Any claim arising under or relating
------------------------------
to this Agreement shall be governed by the internal substantive laws of the
State of Delaware or federal courts located in Delaware, without regard to
principles of conflict of laws. Each party hereby agrees to jurisdiction and
venue in the courts of the State of Delaware for all disputes and litigation
arising under or relating to this Agreement. Company represents that it is
undergoing a corporate recapitalization with the ultimate goal of it being the
parent of both its Korean and Chinese subsidiaries. Company agrees to submit
itself and its subsidiaries to the jurisdiction of the State or Federal Courts
of Delaware pursuant to this Section 12.4, including receipt of service of
process.
12.5 Relationship of the Parties. This Agreement is not intended to be,
---------------------------
nor shall it be construed as, a joint venture, association, partnership,
franchise or other form of business relationship. Neither Party shall have nor
hold itself out as having any right or power or authority to assume, create, or
incur any expense, liability or obligation, expressed or implied, on behalf of
the other Party, except as expressly provided herein. Except as expressly
agreed, each Party shall bear its own costs and expenses incurred under or in
conjunction with its performance of its obligation contained in this Agreement.
12.6 Existing Agreement and Relationship to this Agreement. All terms and
-----------------------------------------------------
conditions set forth in the CPA shall remain in effect and control the purchase
of Company's Products except in the event of a direct
*Confidential treatment requested.
-7-
<PAGE>
conflict or inconsistency. This Agreement is intended to supplement the CPA. In
the event of any direct conflict or inconsistency between the CPA and this
Agreement, the terms and conditions of this Agreement shall control. Upon any
change of control, this Agreement will survive and the new owners would be
required to honor all obligations set forth therein.
12.7 Assignment. Except for assignment to a wholly owned subsidiary, for
----------
a period five (5) years from the Effective Date, the obligations of the Company
under this Agreement may not be assigned, whether by operation of law or
otherwise, without the prior written consent of the Intel, which consent may not
be unreasonably withheld. Intel reserves the right to withhold such consent if
in its good faith reasonable judgement, such proposed assignee is not capable of
meeting Company's obligations under the Agreement. Subject to the foregoing,
this Agreement shall inure to and benefit and bind the successors and permitted
assigns of the Parties.
12.8 Notices. All notices, demands or consents required or permitted
-------
hereunder shall be in writing and shall be delivered, sent by facsimile (with
confirmation copy by mail) or telex, or mailed to the respective Parties at the
addresses first set forth in the first paragraph of this Agreement or at such
other address as shall have been given to the other Party in writing for the
purposes of this clause. Such notices and other communications shall be deemed
effective upon the earliest to occur of (i) actual delivery, (ii) five (5) days
after mailing, addressed and postage prepaid, returned receipt requested, as
aforesaid, or (iii) one (1) business day after transmission by telex, telegram
or facsimile where receipt has been confirmed by the same type of transmission
or in writing received by the sender.
12.9 Severability. The provisions of this Agreement are severable and if
------------
any one or more such provisions shall be determined to be invalid, illegal or
unenforceable, in whole or in part, the validity, legality and enforceability of
any of the remaining provisions or portions thereof shall not in any way be
affected or impaired thereby and shall nonetheless be binding between the
Parties hereto.
12.10 Titles and Headings. Titles and headings to Sections herein are
-------------------
inserted for convenience of reference only and are not intended to affect the
meaning or interpretation of this Agreement.
12.11 Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
duly authorized officers or representatives to be effective as of the date first
above written.
Intel Corporation ChipPAC Limited
By: /s/ Craig C. Brown By: /s/ Richard Parsons
--------------------------- ---------------------------------
Name: Craig C. Brown Name: Richard Parsons
------------------------- -------------------------------
Title: Director, Assembly/Test Title: DIRECTOR
Materials Group -----------------------------
------------------------
-8-
<PAGE>
Appendix A
[redacted*]
*Confidential Treatment requested.
-9-
<PAGE>
EXHIBIT 10.14
INTEL CONFIDENTIAL
------------------
INTEL/CHIPPAC LIMITED
ASSEMBLY SERVICES AGREEMENT
(Replacement Agreement for Intel Agreement No. 0995ELR001)
This Agreement ("Agreement") is entered into this 5th day of August, 1999 and
shall become effective upon the Effective Date, by and between Intel Corporation
("Intel"), a Delaware corporation with its principal offices located at 2200
Mission College Boulevard, Santa Clara, California 95052, and ChipPAC Limited, a
British Virgin Islands corporation with principal offices located at Craigmuir
Chambers, Road Town, Tortola, British Virgin Islands ("ChipPAC"). Intel and
ChipPAC are sometimes collectively referred to as the "Parties" or singularly as
a "Party". "Effective Date" means the date of consummation of the transactions
contemplated by that certain Agreement and Plan of Recapitalization and Merger
dated as of March 13, 1999, as amended, by and among Hyundai Electronics
Industries Company, Ltd., Hyundai Electronics America, ChipPAC, Inc. and ChipPAC
Merger Corp.
RECITALS:
- --------
WHEREAS, Intel desires to enter into a contract assembly and test arrangement
with ChipPAC as more specifically described herein.
WHEREAS, ChipPAC is in the business of doing contract assembly and test work for
integrated circuit manufacturers and desires to perform such services for Intel.
WHEREAS, the Parties desire to set forth below the conditions and covenants
under which such work shall be performed.
NOW THEREFORE, in consideration of the mutual covenants herein contained, the
Parties agree as follows:
1. DEFINITIONS
-----------
1.1 "[redacted*]" shall mean Intel's chipset products utilizing the
[redacted*] packaging process.
1.2 "[redacted*]" shall mean Intel's chipset products utilizing the
[redacted*] packaging process.
1.3 "[redacted*]" shall mean the chipset products utilizing the
[redacted] packaging process.
*Confidential treatment requested.
-1-
<PAGE>
1.4 "Die Product" shall mean an Intel Product in an unassembled form,
without packaging, specified in Exhibit D, and provided by Intel to
---------
ChipPAC under this Agreement in order for ChipPAC to perform the
Services.
1.5 "Die Product Specification" shall mean the technical information for
each Intel Product which ChipPAC is authorized to handle under this
Agreement.
1.6 "Facility" shall mean the Intel work area in the factory provided by
ChipPAC to perform the Services as defined below.
1.7 "Intel Product" shall mean the finished product which is sold by Intel
in a packaged form and which contains the die of the related Die
Product, and which ChipPAC processes or manufactures on behalf of
Intel which complies with the Specifications/ Performance Standards
specified in Exhibit B.
---------
1.8 "Intel Product Data Sheet" shall mean the technical information for
each Intel Product supplied by Intel to purchasers of Intel Products.
1.9 "Leadframes" shall mean the leadframes that ChipPAC shall order as
Piece Parts in anticipation of fulfilling Intel's orders for
[redacted*] and [redacted*].
1.10 "Leadtime" shall mean TPT plus transit time to Intel.
1.11 "Leadtime Procurement Period" shall mean the procurement of Piece
Parts during the Leadtime period.
1.12 "LIPAS" (Line Item Performance Against Schedule) shall mean the number
of Line Items that shipped in a given week divided by the number of
Line Items scheduled by ChipPAC to be shipped during the same week per
Intel's forecast.
1.13 "Non Data Sheet Functionality" shall mean (a) features, instructions,
operating modes, and other functions which may be contained in the
Intel Product and the Die Product but which Intel does not document
and which are not required for the Intel Product and the Die Product
to comply with the related Intel Product Data Sheet, and (b) internal
nodes and signals which are not accessible at the bond pads of the Die
Product.
*Confidential treatment requested.
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<PAGE>
1.14 "Piece Parts" shall mean all materials procured and furnished by
ChipPAC in order to perform the Services under this Agreement.
1.15 "Rejects" shall mean the product produced by ChipPAC which do not
comply with the Specifications and Performance Standards specified in
Exhibit B, are damaged or are otherwise returned to ChipPAC or
---------
rejected by Intel.
1.16 "Release" shall mean Intel's purchase order or change order accepting
ChipPAC's offer to ship a definite quantity of Intel Products or to
provide Services to a specified schedule and pricing.
1.17 "Service(s)" shall mean the work to be performed as specified in
Exhibit A in compliance with the Specifications/Performance Standards
---------
specified in Exhibit B.
---------
1.18 "Substrates" shall mean the substrate materials that ChipPAC shall
order as Piece Parts in anticipation of fulfilling Intel's orders for
[redacted*] Products.
1.19 "Through Put Time" (TPT) shall mean the number of calendar days
required to manufacture the Intel Product, starting when the Wafers or
Die Product are released from inventory at ChipPAC and ending when the
Intel Products are shipped out of ChipPAC.
1.20 "Wafer" shall mean Intel's substrate material that contains unscribed
Die Product that have been sorted by Intel as Die Product which has
passed the sort criteria for the Intel Product ("non-inked") and Die
Product which has failed the sort criteria for the Intel Product
("inked").
1.21 "Work in Process" referred to hereinafter as "WIP".
2. STATEMENT OF WORK
-----------------
2.1 ChipPAC will provide all facilities, equipment, material, manpower and
expertise necessary to perform the Services according to Intel
requirements and specifications as referenced in Exhibits A and B.
----------------
2.2 Intel shall supply ChipPAC with all Wafers and Die Product.
2.3 ChipPAC shall provide at ChipPAC's expense all Piece Parts, supplies
and peripheral products, including leadframes, required for ChipPAC to
perform the Services.
*Confidential treatment requested.
-3-
<PAGE>
2.4 ChipPAC shall perform the Services in accordance with Intel's
requirements and specifications as specified in Exhibits A and B.
----------------
2.5 ChipPAC shall at least meet the minimum yields and maximum TPT
specified in Exhibit C, with a goal of continually improving both
---------
yield and TPT.
2.6 ChipPAC shall adhere to Intel's procedures with respect to security,
traceability and accountability as specified herein.
3. PRE-PRODUCTION
--------------
3.1 In the event that Intel determines a need to have certain Intel
Products produced by ChipPAC on a limited scale or as prototypes in
order to qualify those Intel Products or the process involved or to
produce samples of the Intel Products ("Pre-Production Parts"), prior
to beginning full production, Intel and ChipPAC shall agree on the
quantity, specifications, pricing, Leadtime and other requirements for
each such Pre-Production Part. All orders for Pre-Production Parts
must first be authorized in writing by Intel. Once Intel has
qualified and accepted the Pre-Production Parts, these may be ordered
as Intel Products under the Agreement.
3.2 [redacted*]
3.3 Intel recognizes that yields for Pre-Production Parts may be difficult
to control. If ChipPAC's build amount does not provide sufficient
quantities to provide the quantity ordered by Intel, and the
outstanding amount is less than [redacted*] of the ordered quantity,
Intel may either cancel the balance of the order without penalty, or
allow ChipPAC to provide the balance of the order at a later date, not
to exceed [redacted*] from the date Intel provides replacement Die
Product.
3.4 ChipPAC warrants that Pre-Production Parts shall meet design test
vectors and be free of manufacturing defects, but otherwise are
provided "AS IS".
4. OWNERSHIP
---------
4.1 All Wafers and Die Product shall be held by ChipPAC for the sole
benefit of Intel. Ownership of Wafers and Die Product shall remain
with Intel. ChipPAC acknowledges that Intel retains an ownership
interest in the Wafers and Die Product and agrees to assist Intel in
perfecting said security interest under the Uniform
-------
*Confidential Treatment requested.
-4-
<PAGE>
Commercial Code and other relevant laws, at Intel's request. Ownership
---------------
of all Rejects shall remain with Intel.
5. CONFIDENTIALITY AND PUBLICITY
-----------------------------
5.1 Any confidential information to be exchanged between the Parties shall
be governed by the terms of the Corporate Non-Disclosure Agreement
(CNDA) number 0875665, which ChipPAC agrees to be bound by. At a
minimum, ChipPAC agrees to maintain such information in confidence,
pursuant to the terms of the above-referenced CNDA, to take all
reasonable precautions to prevent unauthorized disclosure and to use
such information only within the scope of this Agreement until the
information becomes publicly available through no fault of ChipPAC.
Examples of confidential information include, but are not limited to,
Wafers, Die Product, Die Product Specifications, yield, probe
characteristics, number of Wafers, and number of Die Product.
5.2 ChipPAC is responsible for (i) secure storage in a segregated
Facility, handling, processing and return of Intel Product
incorporating Die Product, and (ii) the return (or certified
destruction) of all scrap/Rejects to Intel. ChipPAC will be liable
for any loss, including, but not limited to, theft, destruction, and
deterioration.
5.3 ChipPAC's Facility, manufacturing and wafer processing areas must be
secure and accessed only by ChipPAC's employees or contractors on a
need-to-know basis. Any third party, including contract employees,
involved in any aspect of Wafer or Die Product shipping, storage,
security, processing, assembly, or handling must sign a Non-Disclosure
Agreement with Intel.
5.4 ChipPAC's employees who access Intel's premises may be required to
sign a separate non-disclosure agreement prior to admittance to
Intel's premises.
5.5 ChipPAC warrants that no information disclosed by ChipPAC to Intel, in
any form whatsoever, is the confidential information of any other
party without written authorization from that Party.
5.6 Neither Party may use the other Party's name in advertisements, news
releases, publicity statements, on the internet, or otherwise disclose
the existence or content of this Agreement, without the other's prior
written consent.
6. DELIVERY, RELEASES AND SCHEDULING
---------------------------------
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<PAGE>
6.1 Intel shall provide ChipPAC with a rolling [redacted*] operating
forecast of its requirements every week. An Intel Work Week Calendar
sample is attached as Exhibit G.
---------
6.2 Response: ChipPAC shall provide a written response to Intel's
[redacted*] requirements forecast letter within [redacted*] after
receipt. If no response is received by Intel in this time period, then
the forecast is deemed to be approved by ChipPAC.
6.3 ChipPAC shall use the forecast only as a guide to adequately prepare
for Intel's anticipated requirements. Intel is not obligated to
purchase any specific business under this Agreement. Intel's
forecasts are subject to change and are not commitments. ChipPAC
understands that Intel's demand is dependent on market and other
factors beyond Intel's control and this may result in demand being
reduced, increased or eliminated.
6.4 ChipPAC shall meet the Intel unit requirements as set forth in the
shipping Release for the applicable purchase order as acknowledged by
ChipPAC as specified in paragraph 6.2 above.
6.5 Intel shall place with ChipPAC a Release for each Intel Product by the
minimum Leadtime required, specifying quantity, delivery date and
delivery place. ChipPAC agrees to acknowledge in writing each Release
within [redacted*]. ChipPAC shall make weekly delivery
commitments by Line Item for the weekly Intel requests and monthly
delivery commitments by Line Item for the remaining months of the
forecast period. ChipPAC's delivery commitment shall be firm for the
Leadtime Procurement Period. Intel may make changes to its Releases
at any time in the form of "Demand Exceptions". Such Demand Exception
changes shall be sent immediately to ChipPAC in writing by fax or
other electronic means. ChipPAC must provide to Intel a written
response to Intel's Demand Exceptions via fax or e-mail within twenty-
four (24) hours after receipt of the Demand Exception changes. At such
time as Intel receives ChipPAC's committed response to the Demand
Exceptions, Intel shall update the Release accordingly. [redacted*]
6.6 ChipPAC agrees that all orders for Intel Products will ship on the
exact date specified. In the event that an order shipment is going to
be late, Intel must be notified as soon as ChipPAC is aware that the
Intel Product will not meet its committed ship date. Partial shipments
must be authorized by Intel and are counted as late shipments and will
only be considered complete when all Intel Products for
*Confidential treatment requested.
-6-
<PAGE>
that order have been received. If shipments are late by more than
[redacted*], at no fault of Intel, at Intel's option, Intel can
cancel the order with no charge. ChipPAC will be responsible for any
costs incurred by Intel in obtaining cover in the event of such order
cancellation. Intel shall have no obligation for orders shipped more
than [redacted*] late.
6.7 ChipPAC shall promptly notify Intel if ChipPAC is unable to perform
Services or deliver orders as scheduled and shall state the reasons
for such non-delivery or non performance. Such notification by
ChipPAC shall not affect Intel's termination rights.
6.8 Delivery Performance. ChipPAC's LIPAS performance shall be 100%. If
--------------------
ChipPAC's LIPAS performance falls below 100% for any reason, at no
fault of Intel, then ChipPAC shall promptly implement a corrective
action plan approved by Intel to bring LIPAS back into 100%
compliance. [redacted*]
6.9 Intel may place any portion of a Release on hold by notice which shall
take effect immediately upon receipt. Releases placed on hold will be
rescheduled or canceled within a reasonable time (to be mutually
agreed upon by Intel and ChipPAC).
6.10 [redacted*]
6.11 Intel-requested or Intel-approved changes that result in ship date
changes will be reflected on a written change order to the Release
showing the revised ship and delivery dates.
6.12 ChipPAC shall maintain a safety stock of Piece Parts including
Leadframes and Substrates in sufficient quantity to maintain
production in accordance with the then-current Intel forecasts of
[redacted*] ("Safety Stock Level"), in addition to the quantity
specified on the then current Release, unless otherwise requested by
Intel in writing. [redacted*]
*Confidential treatment requested.
-7-
<PAGE>
[redacted*]. All other Piece Part liability is covered by paragraph
6.13 below.
6.13 Cancellation. If Intel cancels all or part of any order for Intel
------------
Products, Intel shall pay for the related WIP for the canceled order,
as outlined in Exhibit E, Cancellation Liability.
---------
6.14 Rescheduling. Intel may at any time, not later than [redacted*]
------------
before the scheduled delivery date, reschedule any Release line item
from such scheduled delivery date to another date. Intel will be
liable only for the Piece Parts ordered relating to the specific
Release line item as outlined in Exhibit E, Cancellation Liability.
---------
Intel may also place all or any part of an order on hold, which shall
take place immediately upon receipt of notice by ChipPAC. Orders
placed on hold shall be canceled or rescheduled within a reasonable
time.
6.15 ChipPAC Notice. ChipPAC shall promptly notify Intel if ChipPAC is
--------------
unable to make any scheduled delivery, and shall state the reasons.
7. REPORTING
---------
7.1 ChipPAC shall provide Intel with a weekly report of all inventories
(including Die Product inventory), production schedule status, WIP
inventory, shipment, and any and all engineering and quality data
required for yield loss analysis to a designated Intel Representative
at Intel ISSL. This report must be in Intel's possession by 12:00
noon each Monday (Korean time) for the previous week. Intel may at
any time, upon one (1) business day's notice to ChipPAC, conduct a
physical inventory of all such Wafer, Die Product, Intel Products, WIP
and/or Rejects in the possession of ChipPAC.
7.2 At Intel's option, ChipPAC shall provide the Intel Program Manager,
with a soft copy or hard copy of monthly reports to a designated Intel
representative of all shipouts, ending-on-hand inventories (including
Wafer and Die Product inventory), Rejects, and units in-transit out of
production Facility to Intel. This report must be in Intel's
possession on the Intel month-end Friday by the end of the business
day (U.S. Pacific Time). Intel may at any time, upon one (1) business
day's notice to ChipPAC, cycle count and/or audit inventory all such
Wafers and Die Product, Intel Product and/or Rejects in the possession
of ChipPAC.
*Confidential treatment requested.
-8-
<PAGE>
8. PRICE AND PAYMENT
-----------------
8.1 [redacted*]
8.2 Prices charged by Hyundai, ChipPAC's predecessor, for the Services
during the one-year period from September 16, 1996 are specified in
Exhibit E. The pricing schedule specified in Exhibit E shall remain
--------- ---------
firm or decline for the one-year period from September 16, 1996 unless
process changes are made by Intel, in which case a revised pricing
schedule shall be mutually agreed to by both Parties. Notwithstanding
the above, in extraordinary circumstances wherein Intel requests
changes to the Intel Product that substantially affect the price or if
market factors have changed which substantially affect the price, the
Parties will negotiate a revised pricing schedule which shall be
mutually agreed to by both Parties.
8.3 [redacted*]
8.4 Invoices shall include: purchase order number, description of and
dates of Services provided, prices and extended totals. Payment shall
not constitute acceptance of Intel Products. Applicable taxes and
other charges such as duties, customs, tariffs, imposts and government
imposed surcharges shall be stated separately on ChipPAC's invoice.
8.5 Additional costs, beyond those described on Exhibit E, shall not be
---------
reimbursed without Intel's prior written approval.
8.6 ChipPAC shall provide invoices with each shipment to Intel. All such
invoices shall be paid by Intel in U.S. dollars, net [redacted*] days
from the receipt of an acceptable invoice. The invoice amounts shall
be calculated based on the pricing set forth in Exhibit E or such
---------
other pricing mutually agreed upon by Intel and ChipPAC.
*Confidential treatment requested.
-9-
<PAGE>
9. QUALITY AND RELIABILITY
-----------------------
9.1 Qualification Requirements. ChipPAC is responsible for meeting and
--------------------------
maintaining Intel's Quality and Reliability (Q&R) requirements as
listed in the Specifications referenced in Exhibit B.
---------
9.2 Qualification Stresses and Testing. ChipPAC is responsible for
----------------------------------
performing all qualification stresses and testing as per the
Specifications referenced in Exhibit B, except for those stresses and
---------
tests which Intel and ChipPAC mutually agree will be performed by
Intel. These exceptions will be documented on any new product and/or
package introduction by Intel to ChipPAC.
9.3 Traceability. ChipPAC shall demonstrate to Intel that ChipPAC's
------------
traceability system tracks each Intel Product box and unit to a
specific fab, assembly and test lot traveler, and is capable of
tracing to where each Intel Product lot was shipped and on which day.
Traceability records shall be maintained for five (5) years.
9.4 Manufacturing and Monitoring. ChipPAC shall properly manufacture,
----------------------------
monitor, test, and inspect all Intel Product and Rejects resulting
from the performance of the Services in accordance with the
specifications in Exhibits A and B. ChipPAC shall manufacture Intel
----------------
Product only at the Facilities qualified by Intel and documented in
the specifications referenced in Exhibits A and B. ChipPAC may not
----------------
move any portion of the manufacturing process to any other facility
except with the prior written approval of Intel.
9.5 Change Control. Requirements and specifications listed in Exhibits A
-------------- ----------
and B define the change control baseline. ChipPAC shall notify Intel
-----
of any proposed changes from the change control baseline at least
[redacted*] prior to the receipt of affected Intel
Product at Intel, per the requirements in Change Control
Specifications listed in Exhibit B. ChipPAC shall provide Intel with
---------
Q&R data supporting the proposed change and Intel Product samples at
least [redacted*] prior to the proposed implementation date
of the change. ChipPAC shall not make the proposed change without
Intel's prior written approval. ChipPAC is responsible for ensuring
that the Leadtime of affected Intel Products to Intel is met. In the
event Intel's customers, or Intel, reasonably determine not to accept
the proposed changes, ChipPAC shall not make such change(s).
9.6 Failure Analysis Correlation Request. When potentially defective
------------------------------------
Intel Product is returned to ChipPAC by Intel or Intel's customers,
ChipPAC shall promptly perform correlation and failure analysis
against the specifications referenced in Exhibit B,
---------
* Confidential treatment requested.
-10-
<PAGE>
stop processing questionable Intel Product and implement corrective
action on the Intel Product and WIP. ChipPAC commits to resolve issues
in accordance with the following timing following receipt of initial
failure report:
(a) Initial Correlation: Go/No-Go electrical or mechanical tests
shall be performed within [redacted*] of receipt. A telephone
report to Intel will be the timing end point. ChipPAC shall
follow-up with a summary of the testing and results. In the event
of Intel customers' going "lines-down" or approaching a near
"lines down" situation, Intel shall request initial correlation
testing reports to be completed within [redacted*] of ChipPAC's
receipt.
(b) Unless otherwise requested, ChipPAC shall complete, implement and
document failure analysis and/or stop processing questionable
Intel Product within [redacted*] of receipt.
(c) Unless otherwise requested, ChipPAC shall implement a root cause
corrective action plan within [redacted*] to receipt.
ChipPAC agrees to provide failure analysis correlation request support
for up to [redacted*] after last delivery of an Intel Product to
Intel.
9.7 Continuous Improvement. During the production life of each Intel
----------------------
Product, ChipPAC shall seek to continuously improve performance in the
areas of Q&R pursuant to the requirements and specifications listed in
Exhibits A and B. Both Parties shall meet regularly to review
----------------
progress and define improvement actions and objectives. The meeting
frequency shall be as agreed by the Parties. During the production
period, ChipPAC shall adequately staff to sustain and manage the Intel
program including supporting programs of continuous improvement.
9.8 Corrective Action.
-----------------
(a) Intel may periodically sample Intel Product and use the data
obtained to determine if the Q&R requirements and/or other
specifications are being met. If Intel determines that
requirements are not being met, Intel shall notify ChipPAC and
Intel may reject any affected Intel Product and the affected lots
and return it to ChipPAC. If ChipPAC is responsible for the
failure and is unable to correct the problem after a reasonable
period of time, Intel may cancel, at no cost or obligation to
Intel, Releases for Intel Products affected by the problem and
Intel shall have no liability for WIP.
*Confidential treatment requested.
-11-
<PAGE>
(b) If Intel Product fails to consistently meet the Q&R requirements,
or if in Intel's reasonable opinion, any failure or recurring
failure by ChipPAC to maintain the specifications referenced in
Exhibit B could lead to damage to the reputation of Intel or
---------
Intel products, the Parties agree that the senior management of
the Parties, within two (2) working days after receipt of a
written notice from Intel of such situation, will commence
discussions regarding the problem. The Parties will cooperate
fully and share all relevant information in attempting to resolve
the situation. If the Parties do not mutually agree after such
discussion that the problems have been resolved, ChipPAC will, at
Intel's written request, cease manufacturing any Intel Products
which, in Intel's opinion, may be affected by such reliability,
quality or process control problems until such time as Intel
agrees that the problem or problems have been resolved. Further,
if ChipPAC is responsible for the failure or recurring failure,
then Intel may cancel Intel Product orders at no cost or
obligation to Intel, including for WIP.
9.9 Audit. Intel representatives and key customer representatives, upon
-----
Intel's request, shall be allowed to visit ChipPAC's assembly and test
facilities during normal working hours upon reasonable notice to
ChipPAC for the purpose of monitoring production processes and
compliance with any requirements set forth in this Agreement. Upon
completion of the audit, ChipPAC and Intel will mutually agree to an
audit closure plan, to be documented in the audit report issued by
Intel. ChipPAC agrees to execute the audit closure plan within
[redacted*] of receipt of the audit report.
10. PACKING AND SHIPMENT
--------------------
10.1 ChipPAC shall mark and pack all Intel Product in accordance with the
specifications referenced in Exhibit B.
---------
10.2 Transportation charges and insurance for all returned Intel Products
and Rejects are to be paid by ChipPAC. Risk of loss for Intel
Products and all returned Rejects in transit shall remain with
ChipPAC. This paragraph shall not apply in cases where Intel uses a
designated freight forwarder for Intel Products and Rejects.
10.3 F.O.B. point for Intel Product is point of origin unless otherwise
specified by Intel and agreed to by both Parties. All items shall be
prepared for shipment in a manner which (i) follows good commercial
practice, (ii) is acceptable to common carriers for shipment at the
lowest rate, and (iii) is adequate to ensure safe arrival. ChipPAC
*Confidential treatment requested.
-12-
<PAGE>
shall mark all containers with necessary lifting, handling and
shipping information, purchase order number, and the date of
shipment. ChipPAC shall select the most cost effective carrier, given
the time constraints known to ChipPAC. This paragraph shall not apply
in cases where Intel uses a designated freight forwarder or provides
ChipPAC with other written instructions for Intel Products and
Rejects.
10.4 ChipPAC may use any freight forwarder of its own designation for
Rejects being returned under warranty as specified in Section 11
below, in which case, ChipPAC shall make all transportation
arrangements and prepay charges of transportation between Intel and
ChipPAC.
11. WARRANTY
--------
11.1 ChipPAC warrants that the Services for Intel Products performed by
ChipPAC shall be free from defects in material and workmanship, shall
not affect the merchantability of Intel Products for so long as such
Intel Products are used by any means fit for ordinary purposes, and
shall meet all agreed upon specifications and requirements as stated
in Section 2, Exhibits A and B. Intel may reject and immediately stop
----------------
shipment of Intel Product which fails to meet the foregoing warranty.
If ChipPAC is unable to correct such failure within a reasonable
time, Intel may cancel, at no cost or obligation to Intel, Releases
subject to the failure, and Intel shall have no obligation for WIP.
If such failure continues or affects a significant amount of Product,
Intel may terminate this Agreement.
11.2 Claims. Intel Product subject to warranty claims shall be returned to
------
ChipPAC together with an explanation of claim. Intel shall not make a
claim under this warranty no more than [redacted*] after Intel
Product delivery. ChipPAC shall replace any Rejects covered by the
warranty with replacement Intel Products in equivalent number and
within the appropriate Leadtime as specified on Exhibit F, without
---------
charge to Intel and with ChipPAC paying Intel the amount listed in
Exhibit F (liquidated damages assessment) for each replacement Die
---------
Product. Intel has the option to trade the current package
replacement with a different Intel Product as Intel demand indicates.
11.3 Intel may, at its option, perform an incoming Intel Product
inspection within [redacted*] of Intel's receipt of Intel
Product. Intel shall notify ChipPAC in writing that it will be
returning Rejects to ChipPAC for verification. ChipPAC shall verify
that the Intel rejection was appropriate within [redacted*] after
receipt. If Intel does not send notification to ChipPAC that Rejects
will be returned, then it is agreed
*Confidential treatment requested.
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<PAGE>
that the Intel Products subject to the then current shipment is
deemed to have passed quality inspection and the warranty period
begins to run.
11.4 Rejection Criteria
------------------
(a) If any full or partial shipment of Intel Product delivered to
Intel fail to comply with this warranty, then at its option,
Intel may: i) reject defective Intel Product and return them to
ChipPAC for rework, or ii) in the event rework is not possible,
Intel may within [redacted*] from date of rejection, furnish to
ChipPAC sufficient additional Wafers or Die Product to permit
ChipPAC to provide replacement of Intel Product at no cost to
Intel, or iii) reject the work on any or all Rejects and not pay
for such work.
(b) All labor and shipping for reworked and replacement Intel
Products shall be provided by ChipPAC at no additional charge to
Intel so long as the assembly requirements for the Intel Product
being reworked or replaced have not changed since the original
labor was provided.
(c) All rework and replacement Intel Product shall be completed and
returned to Intel within the maximum TPT (as specified in
Exhibit C) from the date of receipt by ChipPAC, unless otherwise
---------
agreed to in writing by both Parties.
11.5 CHIPPAC'S EXPRESS WARRANTIES INCLUDING THE WARRANTY OF
MERCHANTABILITY SET FORTH IN THIS AGREEMENT ARE IN LIEU OF ALL OTHER
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, WARRANTIES AS TO CONDITION, DESCRIPTION, FITNESS FOR A
PARTICULAR PURPOSE, INFRINGEMENT, OR AS TO ANY OTHER MATTER.
11.6 Return of Wafers and Die Product; Liquidated Damages; and Accounting
--------------------------------------------------------------------
(a) Return of Wafers and Die Product. Unless otherwise agreed,
--------------------------------
ChipPAC hereby acknowledges and agrees it is responsible to
Intel for the return of all Wafers and Die Product delivered to
ChipPAC by Intel; the Wafers and Die Product may be returned as
Intel Product or otherwise. Any Intel Product not meeting the
specifications contained in Exhibit A shall be returned to Intel
---------
as Rejects (separated and labeled accordingly).
*Confidential treatment requested.
-14-
<PAGE>
(b) [redacted*]
(c) Accounting. Wafers and Die Product shall be reconciled with any
----------
variances dispositioned on a monthly basis, on a report provided
by ChipPAC within one (1) week following each Intel month end as
shown by the calendar in Exhibit G. ChipPAC shall also provide a
---------
detailed explanation of the reason(s) for any failure or
inability to return delivered Wafers and Die Product. This
accounting is supplemental to the reports specified in Section
7.2 and subject to Intel's audit rights specified in Section 9.9.
11.7 RMA Procedures. All Rejects or Finished Products returned to ChipPAC
--------------
by Intel, under this Section 11, shall be in accordance with ChipPAC's
Return Material Authorization ("RMA") set forth in Exhibit H. ChipPAC
---------
shall pay all freight charges on returned materials.
12. INSURANCE
---------
12.1 ChipPAC shall bear all risk of loss for all Intel Product, WIP, Pre-
Production Parts, Rejects, Wafer and Die Product while at its
Facility, including providing at its own expense, adequate Commercial
Property Insurance or Inland Marine Insurance against loss of or
damage to the Wafer and Die Product which shall cover, as a minimum,
the replacement cost of all the Wafer and Die Product provided by
Intel, with Intel named as a Loss Payee. ChipPAC shall bear the cost
of any deductible or co-insurance. In the event of loss or damage,
ChipPAC shall promptly reimburse Intel for all replacement costs,
including all such deductible or co-insurance costs.
12.2 Without limiting or qualifying ChipPAC's liabilities, obligations, or
indemnities otherwise assumed by ChipPAC pursuant to this Agreement,
ChipPAC shall maintain, at its sole cost and expense with companies
acceptable to Intel, Commercial General Liability and Automotive
Liability Insurance with limits of liability not less than $1,000,000
per occurrence and including liability coverage for
*Confidential treatment requested.
-15-
<PAGE>
bodily injury or property damage (i) assumed in a contract or
agreement pertaining to ChipPAC's business, and (ii) arising out of
ChipPAC's Services. ChipPAC's insurance shall be primary and any
applicable insurance maintained by Intel shall be excess and non-
contributing. The above coverage shall name Intel as an additional
insured, and shall contain a severability of interest clause.
12.3 ChipPAC shall also maintain Statutory Workers' Compensation coverage,
including a Broad Form All States endorsement in the amount required
by law, and Employer's Liability insurance coverage with liability
limits of not less than $1,000,000 per occurrence. Such insurance
shall include an insurer's waiver of subrogation in favor of Intel.
12.4 ChipPAC shall provide Intel with properly executed Certificates of
Insurance prior to furnishing any Intel Product or Services hereunder
and shall notify Intel, no less than thirty (30) days in advance of
any reduction or cancellation of the above coverage.
12.5 Notwithstanding the insurance requirements of this Agreement, ChipPAC
shall be given the option to self insure for so long as ChipPAC's net
worth as a corporate entity remains above one billion dollars
($1,000,000,000). Coverage shall apply to any loss which but for the
existence of a deductible or self-insured retention would be covered
under the insurance requirements described herein.
13. LIMITATION OF LIABILITY
-----------------------
13.1 [redacted*]
14. INDEMNIFICATION
---------------
14.1 ChipPAC agrees to defend, indemnify and hold Intel harmless from and
against any and all claims, liability, demands, suits, forfeitures,
penalties, judgment, and the associated costs and expenses (including
attorney's fees), which it may hereafter
*Confidential treatment requested.
-16-
<PAGE>
incur, become responsible for or payout as a result of death or
personal injury (including bodily injury) to any person, destruction
or damage to any property, contamination of or adverse affects on the
environment and any clean-up costs in connection therewith, or any
violation of law, governmental regulation or orders, caused in whole
or in part by i) ChipPAC's breach of any term or provision of this
Agreement, or ii) any acts, errors or omissions by ChipPAC, its
employees, officers, agents, representatives, or sub-contractors of
any terms or provision of this Agreement, or iii) Services or Piece
Parts provided by ChipPAC.
14.2 Intellectual Property Indemnification. ChipPAC shall defend,
-------------------------------------
indemnify, and hold Intel and its customers harmless from any costs,
expenses (including attorney's fees), losses, damages or liability
incurred because of actual or alleged infringement of any patent,
copyright, trade secret, trademark, maskwork or other proprietary
right arising out of the use or sale by Intel or use by Intel's
customers of Intel Product. Intel shall notify ChipPAC of such claim
or demand and shall permit ChipPAC to participate in the defense
hereof. If an injunction issues as a result of any such claim,
ChipPAC agrees at its expense and Intel's option to either (i) procure
for Intel the right to continue using Intel Product, (ii) replace them
with non-infringing Intel Product, (iii) modify them so they become
non-infringing, or (iv) refund to Intel the amount paid. Such
indemnification shall not apply where items are manufactured to
Intel's detailed design.
15. TERM AND TERMINATION
--------------------
15.1 This Agreement shall become effective only upon the consummation of
the recapitalization transactions contemplated by that certain
Agreement and Plan of Recapitalization and Merger dated as of March
13, 1999, as amended, by and among Hyundai Electronics Industries Co.,
Ltd., Hyundai Electronics America, ChipPAC, Inc. and ChipPAC Merger
Corp., and shall be of no force or effect prior to such time. This
Agreement shall have prospective effect from the consummation of such
recapitalization transactions only and shall have no retroactive
effect to any time prior to the consummation of such recapitalization
transactions. This Agreement shall forthwith lapse if the
Recapitalization Agreement is terminated. This Agreement shall remain
in effect [redacted*] after July 1, 1999, unless extended by mutual
agreement of the parties.
15.2 Termination by Intel for Cause. Notwithstanding anything in Paragraph
------------------------------
15.1 to the contrary, if ChipPAC fails to meet Intel's quality
standards, specifications, rejection rates or yield rates as specified
in Exhibits B and C, or any other material breach of this Agreement,
----------------
then Intel may give ChipPAC [redacted*] written notice of
*Confidential treatment requested.
-17-
<PAGE>
intention to terminate this Agreement. If ChipPAC has not corrected
such deficiencies as specified by Intel within said [redacted*]
period, then Intel may terminate this Agreement by written notice at
the end of said [redacted*] period.
15.3 Termination by ChipPAC for Cause. Notwithstanding anything in
--------------------------------
Paragraph 15.1 to the contrary, if Intel has committed a material
breach of this Agreement, then ChipPAC may give Intel [redacted*]
written notice of intention to terminate this Agreement. If Intel has
not corrected such deficiencies as specified by ChipPAC within said
[redacted*] period, then ChipPAC may terminate this Agreement by
written notice at the end of said [redacted*] period.
15.4 Termination by Mutual Agreement. In addition to the parties'
-------------------------------
respective rights above, this Agreement may be terminated by mutual
written agreement by and between ChipPAC and Intel.
15.5 [redacted*]
15.6 Obligations Upon Termination
----------------------------
(a) In the event of termination by mutual agreement or termination by
either party for cause, ChipPAC shall, within thirty (30) days
from date of termination, provide a certified accounting for and
return to Intel at Intel's cost and expense all Wafers, Die
Product, Intel Product, Pre-Production Parts, WIP, Rejects,
specifications, documentation, Intel developed software, and any
other materials provided to ChipPAC by Intel during the term of
this Agreement.
(b) If ChipPAC does not return said Wafers, Die Product, Intel
Product, Pre-Production Parts, WIP, or other materials provided
by Intel within such thirty (30) day period, Intel shall invoice
ChipPAC and ChipPAC shall pay Intel an
*Confidential treatment requested.
-18-
<PAGE>
amount equal to Intel's list price or purchase price or, if
neither is available, the replacement costs for all non-returned
materials.
(c) Intel shall have no obligations upon termination except to pay
any outstanding invoices for Intel Product ordered by Intel and
produced by ChipPAC or for WIP based upon the agreed upon
cancellation charges for each Intel Product, as a result of Intel
orders placed prior to the termination notice.
(d) Intel's rights and remedies herein are in addition to any other
rights and remedies provided by law or in equity.
(e) There shall be no charges for termination of orders for Services
not yet provided. Intel shall be responsible for payment of
authorized Services already provided by ChipPAC but not yet
invoiced.
(f) Before assuming any payment obligation under this Section, Intel
may inspect ChipPAC's work and audit all relevant documents.
15.7 Continuing Rights and Obligations. The respective rights and
---------------------------------
obligations of ChipPAC and Intel under the provisions of Section 4
OWNERSHIP, Section 5 CONFIDENTIALITY AND PUBLICITY, Section 11
WARRANTY, Section 13 LIMITATION OF LIABILITY, Section 14
INDEMNIFICATION, Paragraph 18.1 Controlling Law, and Section 19
Dispute Resolution shall survive termination of this Agreement.
16. HAZARDOUS MATERIALS
-------------------
16.1 If Intel Product, Rejects or Services include hazardous materials as
defined by relevant local, state and national law, ChipPAC represents
and warrants that ChipPAC and its personnel providing Services and
Piece Parts to Intel understand the nature of and hazards associated
with the design and/or service of items including handling,
transportation, and use of such hazardous materials, as applicable to
ChipPAC. Prior to causing hazardous materials to be on Intel's
property, ChipPAC shall obtain written approval from Intel's site
Environmental/Health/Safety organization. ChipPAC shall be fully
responsible for indemnification to Intel for any liability resulting
from ChipPAC's actions in connection with (i) providing such hazardous
materials to Intel, or (ii) the use of such hazardous materials in
providing Intel Product, Rejects, Piece Parts or Services to Intel.
The foregoing indemnification and liability shall not be applied to
the actions or measures taken by
-19-
<PAGE>
ChipPAC pursuant to the express written instructions of Intel where
ChipPAC has stated reasonable objection.
16.2 As they become available, ChipPAC shall provide Intel with material
safety data sheets and any other documentation reasonably necessary to
enable Intel to comply with applicable laws and regulations.
16.3 ChipPAC hereby certifies that Intel Product or Piece Parts supplied to
Intel do not contain and are not manufactured with any ozone depleting
substances, as those terms are defined by law.
17. NEW DEVELOPMENTS
----------------
17.1 All inventions and discoveries, whether or not patentable, made by
Intel employee(s) in the course of performance of this Agreement not
using the confidential information of ChipPAC shall be the sole and
exclusive property of Intel, and Intel shall retain any and all rights
to file at its sole discretion any patent application thereon.
17.2 All inventions and discoveries, whether or not patentable, made by
ChipPAC employee(s) in the course of performance of this Agreement not
using the Confidential Information of Intel shall be the sole and
exclusive property of ChipPAC, and ChipPAC shall retain any and all
rights to file at its sole discretion any patent application thereon.
17.3 If Intel and ChipPAC jointly made inventions or discoveries, whether
or not patentable, not using the confidential information of either
Intel or ChipPAC, in the course of performance of this Agreement, then
unless provided herein, such joint invention shall be jointly owned by
Intel and ChipPAC with each party having the right to exploit and
grant licenses in respect to such inventions and any patents arising
therefrom, without the consent of or accounting to the other Party.
In the event of a joint invention, the Parties shall mutually agree
which Party shall have the responsibility for preparing and filing any
patent application on the invention and the Parties agree to execute
documents required for and equitably share in the expenses associated
with obtaining and maintaining such patents.
17.4 In the event one Party elects not to seek or maintain patent
protection for any joint invention in any particular country or not to
share equitably in the expenses thereof with the other Party, that
other Party shall have the right to apply for or maintain such patent
protection at its own expense in such country, and shall have full
control over
-20-
<PAGE>
the protection and maintenance therefor, even though title and rights
to any patent resulting therefrom shall be jointly owned.
18. GENERAL
-------
18.1 Controlling Law. Any claim arising under or relating to this
---------------
Agreement shall be governed by the internal substantive laws of the
State of Delaware without regard to principles of conflict of laws.
Each party hereby agrees to jurisdiction and venue in the State of
Delaware or federal courts located in Delaware for all disputes and
litigation arising under or relating to this Agreement. This
provision is meant to comply with 6 Del. C. Section 2708(a).
18.2 Compliance With Laws. ChipPAC shall comply with all applicable
--------------------
federal, state and local laws and regulations governing the
maintenance and operation of the Facility and performance of Services
covered by this Agreement, including, but not limited to, Department
of Commerce, Environmental Protection Agency and Department of
Transportation regulations applicable to hazardous materials and all
employment and labor laws governing ChipPAC's personnel providing
Services to Intel.
18.3 Export Control. ChipPAC shall not export, either directly or
--------------
indirectly, any Wafers, Die Product or Intel Product without first
obtaining any required license or other approval from the U.S.
Department of Commerce or any other agency or department of the United
States Government.
18.4 Force Majeure. The Parties hereto shall not be liable for any failure
-------------
to perform due to unforeseen circumstances or causes beyond that
Party's reasonable control. Examples of such causes include, but are
not limited to, acts of God, war, riot, embargoes, acts of civil or
military authority, fire, flood, accidents, labor disputes (but no
more than one (1) labor dispute occurrence per year) earthquakes or
shortages of transportation facilities, fuel or materials which cannot
be reasonably replaced from other sources. If the Services are to be
delayed by such contingencies, ChipPAC shall immediately notify Intel
in writing and Intel may either i) extend time of performance, or ii)
terminate the uncompleted portion of the order at no cost to Intel, or
iii) terminate this Agreement under the provisions of Paragraph 15.3.
In cases of a labor dispute ChipPAC shall be responsible to return all
Intel Products, Wafers, Die Product, Rejects, documentation and
related materials to Intel in accordance with Paragraph 15.5 if so
requested by Intel.
18.5 No Partnership/Joint Venture. Performance by the Parties under this
----------------------------
Agreement shall be as independent contractors. Nothing contained
herein or performed under the
-21-
<PAGE>
terms of this Agreement shall constitute the Parties entering upon a
joint venture or partnership, or shall constitute either Party as the
agent of the other Party for any purpose.
18.6 Assignment. Intel may assign this Agreement to its subsidiaries or
----------
affiliates, authorized distributors, or any successor by merger
without ChipPAC's consent; and ChipPAC may assign this Agreement to
its subsidiaries or affiliates without Intel's consent. Otherwise,
this Agreement may not be assigned or otherwise transferred, in whole
or in part by either Party without the other's prior written consent.
No attempt to assign or to transfer in violation of this provision by
either Party shall be binding upon the other.
18.7 Trademarks. Neither Party has any right to use any trademark, logo,
----------
trade name or other identifying mark of the other Party.
18.8 Waiver. Failure by either Party to insist in any instance upon strict
------
conformance to any term or condition herein, or failure by either
Party to act in the event of a breach or default, shall not be
construed as a consent to or a waiver of that breach or default or any
subsequent breach or default of the same or of any other term or
condition contained herein.
18.9 Notices. Any notice required under this Agreement shall be given in
-------
writing and delivered in person or by certified or first-class United
States mail, properly addressed and stamped with the required postage,
to the intended recipient as follows:
For ChipPAC Limited: For Intel:
ChipPAC Limited Intel Corporation
Craigmuir Chambers M/S C6-404
Road Town, Tortola 5000 West Chandler Boulevard
British Virgin Islands Chandler, AZ 85226
Attention: Resident Director Attention: Legal Department
-22-
<PAGE>
cc: cc:
ChipPAC, Inc. Intel Corporation
3151 Coronado Drive M/S SC4-203
Santa Clara, CA 95054, USA 2200 Mission College Blvd.
Attention: Chief Executive Officer Santa Clara, CA 95052
Attention: Legal Department
Either party may change its address as listed above by providing advance
written notice to the other Party.
18.10 Severability. If any provision of this Agreement shall be held to
------------
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
18.11 Order of Precedence.
-------------------
(a) Orders placed hereunder during the term of this Agreement shall
be governed by and subject to only the terms and conditions of
this Agreement and applicable Releases. If any inconsistency or
conflict should arise between this Agreement and the applicable
Releases, the order of precedence in resolving such
inconsistency or conflict shall be:
(1) Release Instructions;
(2) Amendments to this Agreement;
(3) This Agreement;
(4) Product Specifications; and
(5) Exhibits to this Agreement.
(b) Notwithstanding the foregoing, the Parties agree that the terms
and conditions preprinted on the Releases and/or ChipPAC's
order acknowledgment forms, shall not apply.
(c) It is expressly agreed that any lack of reference to this
Agreement on any Purchase Order issued by Intel shall not
affect the applicability of this Agreement to such order.
-23-
<PAGE>
18.12 Entire Agreement. This Agreement, including the recitals and the
----------------
referenced Exhibits, set forth the entire Agreement of the Parties
with respect to the subject matter hereof, and supersedes all prior
and contemporaneous negotiations, correspondence and agreements
pertaining thereto. No modification or waiver of any provision of
this Agreement or consent to any departure therefrom shall be
effective unless made in writing by authorized representatives of
the Parties hereto.
18.13 Ownership and Bailment Responsibilities. Any specifications,
---------------------------------------
drawings, schematics, technical information, data, tools, dies,
patterns, masks, samples, gauges, test equipment and other materials
furnished to ChipPAC or paid for by Intel shall (i) be kept
confidential, (ii) remain or become Intel's property, (iii) be used
by ChipPAC exclusively for Intel's orders, (iv) be clearly marked as
Intel's property, (v) be segregated when not in use, (vi) be kept in
good working condition at ChipPAC's expense, and (vii) be shipped to
Intel promptly on Intel's demand or upon termination or expiration
of this Agreement, whichever occurs first.
ChipPAC shall adequately insure Intel's property. ChipPAC shall be
liable for loss or damage to Intel's property while in ChipPAC's
possession or control.
19. DISPUTE RESOLUTION
------------------
19.1 All disputes arising directly under the express terms of this
Agreement or the grounds for termination thereof shall be resolved
as follows:
The senior management of both Parties shall meet to attempt to
resolve such disputes. If the disputes cannot be resolved by the
senior management, either Party may make a written demand for formal
dispute resolution and specify therein the scope of the dispute.
Within thirty (30) days after such written notification, the Parties
agree to meet for one day with an impartial mediator and consider
dispute resolution alternatives other than litigation. If an
alternative method of dispute resolution is not agreed upon within
thirty (30) days after the one (1) day mediation, either Party may
begin litigation proceedings.
20. EXHIBITS
--------
The following Exhibits are included as part of this Agreement:
Exhibit A - Services Requirements
Exhibit B - Specifications/Performance Standards
-24-
<PAGE>
Exhibit C - Yields/TPT/LIPAS
Exhibit D - Intel Wafer and Die Product Provided to ChipPAC
Exhibit E - Contract Pricing/Cancellation Liability
Exhibit F - Liquidated Damages/Replacement Product Leadtime
Exhibit G - Intel Work Week Calendar
Exhibit H - ChipPAC's RMA Procedures
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates
indicated by their respective signatures.
CHIPPAC LIMITED INTEL CORPORATION
By: /s/ Richard Parsons By: /s/ Craig C. Brown
--------------------------------- -------------------------------
Signature Signature
Richard Parsons for Westlaw Limited Craig C. Brown
- ------------------------------------- -----------------------------------
Name Name
Director Director
- ------------------------------------- -----------------------------------
Title Title
July 20, 1999 July 30, 1999
- ------------------------------------- -----------------------------------
Date Date
-25-
<PAGE>
EXHIBIT A
SERVICES REQUIREMENTS
---------------------
[redacted*]
*Confidential treatment requested.
A-1
<PAGE>
INTEL CONFIDENTIAL
------------------
EXHIBIT "B"
SPECIFICATIONS/PERFORMANCE STANDARDS
------------------------------------
[redacted*]
*Confidential treatment requested.
<PAGE>
INTEL CONFIDENTIAL
------------------
SPECIFICATIONS/PERFORMANCE STANDARDS (Continued)
------------------------------------------------
<PAGE>
INTEL CONFIDENTIAL
------------------
SPECIFICATIONS/PERFORMANCE STANDARDS (Continued)
------------------------------------------------
<PAGE>
EXHIBIT C
YIELD/TPT/LIPAS
---------------
[Redacted*]
*Confidential treatment requested.
C-1
<PAGE>
EXHIBIT D
INTEL WAFERS AND DIE PRODUCT PROVIDED TO CHIPPAC
------------------------------------------------
[Redacted*]
*Confidential treatment requested.
D-1
<PAGE>
EXHIBIT E
CONTRACT PRICING REV. 1/CANCELLATION LIABILITY
----------------------------------------------
CONTRACT PRICING
- ----------------
[REDACTED*]
*Confidential treatment requested.
E-1
<PAGE>
EXHIBIT F
LIQUIDATED DAMAGES & REPLACEMENT PRODUCT LEADTIME
-------------------------------------------------
[REDACTED*]
*Confidential treatment requested.
F-1
<PAGE>
INTEL CONFIDENTIAL
EXHIBIT "G"
INTEL WORK WEEK CALENDAR - 1995
-------------------------------
[REDACTED*]
*Confidential treatment requested.
<PAGE>
EXHIBIT H
CHIPPAC'S RMA PROCEDURES
-------------------------
[REDACTED*]
*Confidential treatment requested.
H-1
<PAGE>
EXHIBIT 10.15
-------------
EXECUTION COPY
--------------
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of August 5, 1999, and shall be effective as of the Effective Date (as
defined below), between ChipPAC, Inc., a California corporation (the "Company")
and Intel Corporation, a Delaware corporation (the "Purchaser"). "Effective
Date" means the date of consummation of the transactions contemplated by that
certain Agreement and Plan of Recapitalization and Merger dated as of March 13,
1999, as amended (the "Recapitalization Agreement"), by and among Hyundai
Electronics Industries Co., Ltd., Hyundai Electronics America, the Company and
ChipPAC Merger Corp. Notwithstanding anything herein to the contrary, this
Agreement shall not take effect until the Effective Date, the representations
and warranties set forth in this Agreement shall be deemed to be made solely
from and after the Effective Date, and the covenants, agreements and other
obligations of the parties created by this Agreement shall apply prospectively
from and after the Effective Date and shall have no retroactive effect. Except
as otherwise indicated herein, capitalized terms used herein are defined in
Section 8 hereof.
The parties hereto agree as follows:
Section 1. Authorization and Issuance and Sale of Stock and the
----------------------------------------------------
Warrant.
- -------
1A. Authorization of Issuance and Sale of Stock and the Warrant.
-----------------------------------------------------------
Subject to the terms and conditions contained herein, the Company will authorize
the issuance and sale to the Purchaser of (i) the Warrant referred to in
paragraph 4D hereof and (ii) 10,000 shares of its Class A Preferred Stock, par
value $.01 per share (the "Class A Preferred"), having the rights and
preferences set forth in the Company's Articles of Incorporation, to be amended
and restated, as set forth in Exhibit A attached hereto, for an aggregate
---------
purchase price of $10,000,000. The aforementioned 10,000 shares of Class A
Preferred shall be initially convertible, as of the Effective Date, into not
less than 6.25% of the Company's Class L Common and Class A Common (as defined
in paragraph 6C), before taking into account any shares of common stock issued
or issuable to employees, officers or directors of the Company or its
Subsidiaries or financing sources.
1B. Purchase and Sale of Stock and the Warrant. Subject to the
------------------------------------------
terms and conditions contained herein, at the Closing (as defined in Section 1C
below), the Company will sell to Purchaser, and Purchaser will purchase from the
Company, (i) 10,000 shares of Class A Preferred and (ii) the Warrant referred to
in paragraph 4D hereof, for an aggregate purchase price for both the Class A
Preferred and the Warrant of $10,000,000. The fair market value of the Class A
Preferred and the Warrant shall be allocated as set forth in paragraph 9M
hereof.
1C. The Closing. Subject to the terms and conditions contained in
-----------
this Agreement, the closing of the purchase and sale of the Class A Preferred
and the Warrant (the "Closing") will take place at a site designated by the
Company, at 10:00 a.m. local time on the first date on which each of the
conditions set forth in Section 2 and Section 3 have been satisfied or
<PAGE>
waived by the party entitled to waive any such condition or at such other place
or on such other date as may be mutually agreeable to the Company and Purchaser
(the "Closing Date"). At the Closing, the Company will deliver to Purchaser
stock certificates evidencing the Class A Preferred to be purchased by Purchaser
and the Warrant, in each case, registered in Purchaser's or its nominee's name,
upon payment of $10,000,000 by wire transfer of immediately available funds to a
bank account of the Company designated to the Purchaser prior to the Closing.
Section 2. Conditions of Purchaser's Obligation at the Closing. The
---------------------------------------------------
obligation of Purchaser to purchase and pay for the Class A Preferred and the
Warrant at the Closing is subject to the satisfaction as of the Closing of the
following conditions:
2A. Representations and Warranties; Covenants. The representations
-----------------------------------------
and warranties contained in Section 6 hereof will be true and correct in all
material respects at and as of the Closing Date as though then made, and the
Company will have performed all of the covenants required to be performed by it
hereunder prior to the Closing Date.
2B. Amendment of Articles of Incorporation. The Company's Articles
--------------------------------------
of Incorporation (the "Articles of Incorporation") will have been amended and
restated as set forth in Exhibit A hereto, will be in full force and effect
---------
under the laws of California as of the Closing Date as so amended and will not
have been further amended or modified.
2C. Recapitalization. The transactions contemplated by the
----------------
Recapitalization Agreement shall have been consummated in accordance with the
terms thereof. Between the date hereof and the Closing Date, there shall have
been no material adverse change to the terms and conditions of the
Recapitalization Agreement.
2D. Stockholders Agreement. The Company, Purchaser and each of the
----------------------
other stockholders of the Company listed therein will have entered into a
stockholders agreement as set forth in Exhibit B attached hereto (the
---------
"Stockholders Agreement"), and the Stockholders Agreement will not have been
amended or modified and will be in full force and effect as of the Closing.
2E. Registration Agreement. The Company, Purchaser and each of the
----------------------
other stockholders of the Company listed therein will have entered into a
registration agreement as set forth in Exhibit C attached hereto (the
---------
"Registration Agreement"), and the Registration Agreement will not have been
amended or modified and will be in full force and effect as of the Closing.
2F. Securities Law Compliance. The Company shall have made all
-------------------------
filings under applicable federal and state securities laws necessary to
consummate the issuance of the Class A Preferred and the Warrant pursuant to
this Agreement in compliance with such laws.
-2-
<PAGE>
2G. Opinion of the Company's Counsel. Purchaser shall have
--------------------------------
received from Kirkland & Ellis, special counsel for the Company, a legal opinion
addressed to Purchaser, dated the Closing Date, in a form to be mutually agreed
upon by counsel for the Company and counsel for the Purchaser.
2H. Closing Documents. The Company shall have delivered to
-----------------
Purchaser all of the following documents:
(i) an officer's certificate, dated the date of the Closing,
stating that the conditions specified in paragraphs 2A through 2G, inclusive,
have been fully satisfied;
(ii) certified copies of (a) the resolutions duly adopted by the
Company's board of directors authorizing the execution, delivery and performance
of this Agreement and each of the other agreements contemplated hereby, the
filing of the amended and restated Articles of Incorporation referred to in
paragraph 2B, the issuance and sale of the Class A Preferred, the issuance of
the Warrant and the consummation of all other transactions contemplated by this
Agreement and (b) the resolutions duly adopted by the Company's stockholders
adopting the amended and restated Articles of Incorporation referred to in
paragraph 2B;
(iii) a certified copy of the Company's Articles of Incorporation
and bylaws, as in effect at the Closing; and
(iv) such other documents relating to the transactions contemplated
by this Agreement as Purchaser or its counsel may reasonably request.
2I. Waiver. Any condition specified in this Section 2 may be
------
waived if consented to by Purchaser; provided that no such waiver shall be
effective against Purchaser unless it is set forth in a writing executed by
Purchaser.
Section 3. Conditions of the Company's Obligation at the Closing.
-----------------------------------------------------
The obligation of the Company to sell the Class A Preferred and issue the
Warrant at the Closing is subject to the satisfaction as of the Closing of the
following conditions:
3A. Representations and Warranties; Covenants. The
-----------------------------------------
representations and warranties contained in Section 7 hereof will be true and
correct in all material respects at and as of the Closing Date as though then
made, and Purchaser will have performed all of the covenants required to be
performed by it hereunder prior to the Closing Date.
3B. Amendment of Articles of Incorporation. The Articles of
--------------------------------------
Incorporation will have been amended as set forth in Exhibit A hereto, will be
---------
in full force and effect under the
-3-
<PAGE>
laws of California as of the Closing as so amended and will not have been
further amended or modified.
3C. Recapitalization. The transactions contemplated by the
----------------
Recapitalization Agreement shall have been consummated in accordance with the
terms thereof.
3D. Stockholders Agreement. The Company, Purchaser and each of the
----------------------
other stockholders of the Company listed therein will have entered into the
Stockholders Agreement, and the Stockholders Agreement will not have been
amended or modified and will be in full force and effect as of the Closing.
3E. Registration Agreement. The Company, Purchaser and each of the
----------------------
other stockholders of the Company listed therein will have entered into the
Registration Agreement, and the Registration Agreement will not have been
amended or modified and will be in full force and effect as of the Closing.
3F. Closing Documents. Purchaser shall have delivered to the Company
-----------------
such documents relating to the transactions contemplated by this Agreement as
the Company or its counsel may reasonably request.
3G. Securities Law Compliance. The Company shall have made all
-------------------------
filings under applicable federal and state securities laws necessary to
consummate the issuance of the Class A Preferred and the Warrant pursuant to
this Agreement in compliance with such laws.
3H. Waiver. Any condition specified in this Section 3 may be waived
------
if consented to by the Company; provided that no such waiver shall be effective
against the Company unless it is set forth in a writing executed by the Company.
Section 4. Covenants.
---------
4A. Financial Statements and Other Information. Prior to the
------------------------------------------
consummation of an Initial Public Offering, the Company will deliver to each
holder of at least 10% of the outstanding Underlying Common Stock:
(i) as soon as available but in any event within 30 days after the
end of each monthly accounting period in each calendar year, unaudited
consolidated statements of income and cash flows of the Company and its
Subsidiaries for such monthly period and for the period from the beginning of
the fiscal year to the end of such month, and unaudited consolidated balance
sheets of the Company and its Subsidiaries as of the end of such monthly period,
and all such statements shall be prepared in accordance with generally accepted
accounting principles, consistently applied, and shall be certified by the
Company's chief financial officer;
-4-
<PAGE>
(ii) as soon as available but in any event within 45 days after the
end of each quarterly accounting period in each calendar year, unaudited
consolidated statements of income and cash flows of the Company and its
Subsidiaries for such quarterly period and for the period from the beginning of
the fiscal year to the end of such quarter, and unaudited consolidated balance
sheets of the Company and its Subsidiaries as of the end of such quarterly
period, and all such statements shall be prepared in accordance with generally
accepted accounting principles, consistently applied, and shall be certified by
the Company's chief financial officer;
(iii) within 120 days after the end of each calendar year,
consolidated statements of income and cash flows of the Company and its
Subsidiaries for such fiscal year, and consolidated balance sheets of the
Company and its Subsidiaries as of the end of such calendar year, all prepared
in accordance with generally accepted accounting principles, consistently
applied, and accompanied by an audit opinion of PriceWaterhouseCoopers LLP or
such other independent accounting firm of recognized national standing approved
by the Company's board of directors; and
(iv) at least 30 days prior to the beginning of each calendar year,
annual budgeted statements of income and cash flows and budgeted balance sheets,
which shall have been reviewed and approved by the Company's board of directors.
4B. Information Requirements after an IPO. Subsequent to the
-------------------------------------
consummation of an Initial Public Offering, the Company will deliver to each
holder of at least 10% of the outstanding Underlying Common Stock, within ten
days after transmission thereof, copies of all registration statements and all
regular, special or periodic reports which it files with respect to the Company
with the Securities and Exchange Commission or with any securities exchange on
which any of its securities are then listed.
4C. Current Public Information. At all times after the Company
--------------------------
has filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder and
shall take such further action as any holder or holders of Restricted Securities
may reasonably request, all to the extent required to enable such holders to
sell Restricted Securities pursuant to Rule 144 adopted by the Securities and
Exchange Commission under the Securities Act (as such rule may be amended from
time to time) or any similar rule or regulation hereafter adopted by the
Securities and Exchange Commission. Upon request, the Company shall deliver to
any holder of Restricted Securities a written statement as to whether it has
complied with such requirements.
4D. Warrant. At the Closing, the Company shall issue Purchaser a
-------
warrant substantially in the form of Exhibit D hereto (the "Warrant"), upon
---------
payment of the consideration set
-5-
<PAGE>
forth in paragraph 1C at the Closing. The exercise of the Warrant shall be
subject to the terms and conditions set forth therein.
Section 5. Transfer of Restricted Securities.
---------------------------------
5A. Transfer of Restricted Securities. Restricted Securities are
---------------------------------
transferable only pursuant to (a) public offerings registered under the
Securities Act, (b) Rule 144 or Rule 144A of the Securities and Exchange
Commission (or any similar rule or rules then in force) if any such rule is
available and (c) subject to the conditions specified in paragraph 5B below, any
other legally available means of transfer.
5B. Opinion Delivery. In connection with the transfer of any
----------------
Restricted Securities (other than a transfer described in paragraph 5A(a) or (b)
above), the holder thereof shall deliver written notice to the Company
describing in reasonable detail the transfer or proposed transfer, together with
an opinion of counsel which (to the Company's reasonable satisfaction) is
knowledgeable in securities law matters to the effect that such transfer of
Restricted Securities may be effected without registration of such Restricted
Securities under the Securities Act. In addition, if the holder of the
Restricted Securities delivers to the Company an opinion of such counsel that no
subsequent transfer of such Restricted Securities shall require registration
under the Securities Act, the Company shall promptly upon such contemplated
transfer deliver new certificates for such Restricted Securities which do not
bear the Securities Act legend set forth in paragraph 7F. If the Company is not
required to deliver new certificates for such Restricted Securities not bearing
such legend, the holder thereof shall not transfer the same until the
prospective transferee has confirmed to the Company in writing its agreement to
be bound by the conditions contained in this paragraph and paragraph 7F.
Section 6. Representations and Warranties of the Company. Except as
---------------------------------------------
set forth in or contemplated by this Agreement, the financial statements
delivered to Purchaser pursuant to paragraph 6G or the disclosures of the
Company described herein, the Company hereby represents and warrants to
Purchaser as follows:
6A. Corporate Existence and Authority. The Company is a corporation
---------------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of California. The Company has full corporate power and authority to
execute and deliver this Agreement and the other agreements contemplated hereby
to which it is a party, to perform its obligations hereunder and thereunder, and
to consummate the transactions contemplated hereby and thereby. The Company has
full corporate power and authority to conduct its business as and to the extent
now conducted and to own, use and lease its assets and properties, and is duly
qualified, licensed or admitted to do business and is in good standing in those
jurisdictions in which the ownership, use or leasing of its assets and
properties or the conduct of its business makes such qualification, licensing,
or admission
-6-
<PAGE>
necessary, except where the failure to be so qualified, licensed, admitted or in
good standing could not reasonably be expected to have a material adverse effect
on the Company.
6B. Authorization; Binding Effect. The execution and delivery by
-----------------------------
the Company of this Agreement and the other agreements contemplated hereby to
which the Company is a party, and the performance by the Company of its
obligations hereunder and thereunder, have been duly and validly authorized by
its Board of Directors, and no other corporate action on its part or on the part
of its shareholders being necessary, except shareholder approval of the amended
and restated Articles of Incorporation. This Agreement has been and the other
agreements contemplated hereby will be, prior to the Closing, duly and validly
executed and delivered by the Company and, upon the execution and delivery
thereof by the other parties thereto, will constitute, its legal, valid and
binding obligations enforceable against it in accordance with the terms thereof,
subject to the effect and limitations of any bankruptcy, insolvency,
reorganization, moratorium or other similar law affecting the enforcement of
creditors' rights generally and to general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
6C. Capital Stock and Related Matters. As of the Closing and
---------------------------------
immediately thereafter, the authorized capital stock of the Company shall
consist of 115,000 shares of Preferred Stock, of which 10,000 shares shall be
designated as Class A Preferred (all of which shall be issued and outstanding)
and 105,000 shares shall be designated as Class B Preferred Stock, par value
$.01 per share (the "Class B Preferred") (70,000 shares of which shall be issued
and outstanding and 35,000 shares of which shall be reserved for future issuance
pursuant to the Recapitalization Agreement) and 380,000,000 shares of Common
Stock, of which 180,000,000 shares shall be designated as Class A Common Stock,
par value $.01 per share (the "Class A Common"), 180,000,000 shares shall be
designated as Class B Common Stock, par value $.01 per share (the "Class B
Common") and 20,000,000 shares shall be designated as Class L Common Stock, par
value $.01 per share (the "Class L Common"). As of the Closing, the Class A
Preferred to be sold pursuant to this Agreement shall be initially convertible
into not less than 6.25% of the Company's Class L Common and Class A Common,
before taking into account any shares of common stock issued or issuable to
employees, officers or directors of the Company or its Subsidiaries or financing
sources. As of the Closing, except for the Class A Preferred, the Company will
not have outstanding any stock or securities convertible or exchangeable for any
shares of its capital stock or containing any profit participation features,
nor, except for the Class A Preferred and the shares of stock reserved for grant
of stock options to the management of the Company and its Subsidiaries
(including any such stock options granted on or prior to the Closing Date),
shall it have outstanding any rights or options to subscribe for or to purchase
its capital stock or any stock or securities convertible into or exchangeable
for its capital stock or any stock appreciation rights or phantom stock plans.
As of the Closing, except with respect to the Class A Preferred, the Company
will not be subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital stock or any warrants,
options or other rights to acquire its capital stock. As of the Closing,
-7-
<PAGE>
all of the outstanding shares of the Company's capital stock will be validly
issued, fully paid and nonassessable.
6D. Subsidiaries. As of the Closing, the Company shall own,
------------
directly or indirectly, all of the issued and outstanding capital stock (or
similar equity interests or registered capital, other than any director's
qualifying or nominee shares) of each of (i) ChipPAC Barbados Limited, a
Barbadian company, (ii) ChipPAC Limited, a British Virgin Islands corporation,
(iii) ChipPAC Korea Company Ltd., a corporation incorporated under the laws of
the Republic of Korea, (iv) Hyundai Electronics (Shanghai) Company Ltd. (name to
be changed to ChipPAC (Shanghai) Company Ltd.), a company limited and wholly
foreign owned entity under the People's Republic of China, (v) ChipPAC Assembly
and Test (Shanghai) Company, Ltd., a company limited and a wholly foreign owned
entity under the laws of the People's Republic of China, (vi) ChipPAC
International Company Limited, a British Virgin Islands corporation, (vii)
ChipPAC Hungary Kft, a Hungarian corporation and (viii) ChipPAC Luxembourg
S.a.r.l., a corporation incorporated under the laws of Luxembourg (collectively
the "ChipPAC Subsidiaries"). Each of the ChipPAC Subsidiaries is a corporation
or limited liability entity duly formed and validly existing under the laws of
its jurisdiction of formation. Each of the ChipPAC Subsidiaries has full
corporate power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties. As of the
Closing, the Company will not directly or indirectly own any rights or interests
in any other person or entity, other than the ChipPAC Subsidiaries. There are
no outstanding options or rights in favor of any person to purchase shares of
any class or series of capital stock of any of the ChipPAC Subsidiaries.
6E. Absence of Conflicts. The execution and delivery by the Company
--------------------
of this Agreement and the other agreements contemplated hereby do not, and the
performance by the Company of its obligations under this Agreement and the other
agreements contemplated hereby and the consummation of the transactions
contemplated hereby and thereby will not, (a) conflict with or result in a
violation or breach of the articles of incorporation or bylaws of the Company;
(b) subject to obtaining the consents, approvals and actions, and making the
filings and giving the notices described in paragraph 6F and paragraph 7D,
conflict with or result in a violation or breach of any law or order applicable
to the Company or any of its assets and properties; (c) (i) conflict with or
result in a violation or breach of, (ii) constitute (with or without notice or
lapse of time or both) a default under, (iii) require the Company to obtain any
consent or approval of any person as a result or under the terms of, (iv) result
in or give to any person any right of termination, cancellation, acceleration or
modification in or with respect to, or (v) result in the creation or imposition
of any lien or encumbrance upon the Company or any of its assets or properties
under, any agreement to which the Company is a party or by which any of its
assets or properties is bound, other than, in the case of clauses (b) and (c),
such conflicts, violations, breaches and other consequences within the scope of
clauses (b) and (c) which would occur solely as a result of the identity or the
legal or regulatory status of Purchaser or any of its Affiliates.
-8-
<PAGE>
6F. Governmental Approvals and Filings. No consent, approval or
----------------------------------
action of, filing with or notice to, any governmental or regulatory authority on
the part of the Company is required in connection with the execution, delivery
and performance of this Agreement or any of the other agreements contemplated
hereby or the consummation of the transactions contemplated hereby or thereby,
except (i) any required filings under "blue-sky" laws of the State of California
and similar laws of any other state; (ii) the filing of the amended and restated
Articles of Incorporation with the Secretary of State of the State of California
and (iii) where required solely as a result of the identity or the legal or
regulatory status of Purchaser or any of its Affiliates.
6G. Financial Statements and Condition.
----------------------------------
(a) The Company has delivered to Purchaser the audited combined
balance sheets of ChipPAC (Direct and Indirect Subsidiaries of Hyundai
Electronics Industries Co., Ltd.) as of December 31, 1998 (the "Financial
Statement Date"), December 31, 1997 and 1996 and the audited combined statements
of operations, of shareholders' and divisional equity, and of cash flows for
each of the four years in the period ended December 31, 1998, together with the
report thereon by PriceWaterhouseCoopers L.L.P. (the December 31, 1998 combined
balance sheet hereinafter referred to as the "Balance Sheet" and all of the
aforementioned financial statements are collectively referred to herein as the
"Financial Statements"). Except as set forth in the notes thereto, all such
combined financial statements were prepared in accordance with generally
accepted accounting principles and fairly present in all material respects the
combined financial position and results of operations of ChipPAC as of the
respective dates thereof and for the respective periods covered thereby.
(b) Since the Financial Statement Date there has been no material
adverse effect on the Company and no event has occurred which could reasonably
be expected to result in a material adverse effect on the Company.
6H. Taxes. The Company and the ChipPAC Subsidiaries have filed or
-----
caused to be filed all tax returns required to be filed in all jurisdictions
under applicable law and all such tax returns are complete and correct in all
material respects. The Company and the ChipPAC Subsidiaries have, within the
time and in the manner prescribed by law, paid directly or indirectly (and until
the Closing will pay directly or indirectly within the time and in the manner
prescribed by law) all taxes that are due and payable. No examination of any
tax return of the Company or the ChipPAC Subsidiaries is underway of which
notice has been provided to the Company.
6I. Legal Proceedings. There are no orders outstanding and no
-----------------
actions or proceedings pending or, to the knowledge of the Company, threatened
against, relating to or affecting the Company or any of the ChipPAC
Subsidiaries, or any of their respective assets and properties, which could
reasonably be expected to delay or to result in the issuance of an order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the
-9-
<PAGE>
transactions contemplated by this Agreement or any of the other agreements
contemplated hereby, or otherwise to impair the ability of the Company to
perform its obligations under this Agreement and the other agreements
contemplated hereby and to consummate the transactions contemplated hereby and
thereby or otherwise to impair the ability of the Company or the ChipPAC
Subsidiaries to conduct their business after the Closing.
6J. Compliance With Laws and Orders. Neither the Company nor any
-------------------------------
of the ChipPAC Subsidiaries has been or is in violation of or in default under
any law applicable to the it, or any of their respective assets and properties
(i) in any material respect or (ii) in any respect that restricts the operation
of the business of the Company or the ChipPAC Subsidiaries.
6K. Benefit Plans; ERISA.
--------------------
(a) Set forth in Section 3.11 of the Company Disclosure Schedule
attached to the Recapitalization Agreement is a list of all Benefit Plans of the
Company and the ChipPAC Subsidiaries or pursuant to which any employee of the
Company or the ChipPAC Subsidiaries is entitled to benefits. Each Benefit Plan
which is listed in Section 3.11 of the Company Disclosure Schedule attached to
the Recapitalization Agreement is in compliance in all material respects with
all applicable laws. Except as set forth in said Section 3.11 of the Company
Disclosure Schedule, there are no proceedings, claims (other than for benefits
payable in the normal course of business) or suits pending or, to the knowledge
of the Company, threatened by any governmental or regulatory authority or any
participant or beneficiary against any of the Benefit Plans, the assets of any
of the trusts under any of the Benefit Plans or the plan sponsor or any
fiduciary of any of the Benefit Plans. All contributions required to be made
with respect to the Benefit Plans relating to any employee of the Company or any
of the ChipPAC Subsidiaries have been made (or have been or will be accrued for
in the ordinary course of business).
(b) There are no (i) unfair labor practice charges pending against,
any of the Company or any of the ChipPAC Subsidiaries or (ii) pending or, to the
best of the Company's knowledge, threatened strikes or arbitration proceedings
involving labor matters affecting the Company or any of the ChipPAC
Subsidiaries. Neither the Company nor any of the ChipPAC Subsidiaries has
experienced any significant strikes, work stoppage or other significant labor
difficulties of any nature.
6L. Real Property.
-------------
(a) Section 3.12(a) of the Company Disclosure Schedule attached to
the Recapitalization Agreement contains a list of each parcel of real property
leased or subleased by the Company or any of the ChipPAC Subsidiaries (as lessor
or lessee). Neither the Company nor any ChipPAC Subsidiary owns any real
property.
-10-
<PAGE>
(b) The Company and the ChipPAC Subsidiaries have or will have at
Closing valid and subsisting leasehold or subleasehold estates in the respective
real properties leased by them as lessee or sublessee under leases or subleases
referred to in paragraph (a) of this paragraph 6L. Each such lease or sublease
is a legal, valid and binding agreement, enforceable in accordance with its
terms, subject to the effect and limitations of any bankruptcy, insolvency,
reorganization, moratorium or other similar law affecting the enforcement of
creditors' rights generally and to general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
6M. Tangible Personal Property. The Company and the ChipPAC
--------------------------
Subsidiaries are or at the Closing will be in possession of, and have or at the
Closing will have marketable title to, valid leasehold interests in or valid and
enforceable rights to use, all tangible personal property which is used in and
material to their business, subject to any Permitted Encumbrance.
6N. Intellectual Property Rights.
----------------------------
(a) At the Closing, giving effect to those licenses and rights to
Intellectual Property to be made available to the Company and its Subsidiaries
from Hyundai Electronics Industries Co., Ltd. and its Affiliates ("Hyundai"),
the Company and the ChipPAC Subsidiaries will have all requisite right, title
and interest in or valid and enforceable rights under contract to use all
Intellectual Property necessary to the conduct of their business as presently
conducted (the "IP Rights") and after the Closing such IP Rights will be
available for use by the Company or one of the ChipPAC Subsidiaries as provided
in such licensing arrangements. Neither the Company nor any of the ChipPAC
Subsidiaries has received notice that they are infringing or misappropriating
any Intellectual Property of any other person. Neither the Company nor any of
the ChipPAC Subsidiaries is infringing or misappropriating any Intellectual
Property of any other person, and no claim against the Company or any ChipPAC
Subsidiary is pending or has been threatened asserting any such infringement or
contesting the validity, enforceability, use or ownership of any IP Rights. No
"right to use" study or similar investigation with respect to the Intellectual
Property of any third party has been conducted by the Company or any ChipPAC
Subsidiary. To the knowledge of the Company, no third party is infringing or
misappropriating the IP Rights.
(b) All material computer systems used in the business of the Company
and the ChipPAC Subsidiaries recognize and shall recognize the advent of the
year 2000 and can correctly recognize and manipulate date information relating
to dates before, on or after January 1, 2000 and the operation and functionality
of such computer systems will not be adversely affected by the advent of the
year 2000 or any manipulations of data featuring date information relating to
dates before, on or after January 1, 2000.
6O. Contracts. Each material contract to which the Company or any
---------
ChipPAC Subsidiary is a party is in full force and effect and constitutes a
legal, valid and binding agreement
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<PAGE>
of the Company or such ChipPAC Subsidiary, enforceable in accordance with its
terms, subject to the effect and limitations of any bankruptcy, insolvency,
reorganization, moratorium or other similar law affecting the enforcement of
creditors' rights generally and to general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
neither the Company nor any ChipPAC Subsidiary nor, to the knowledge of the
Company, any other party to any such contract is in violation of or default
under any material provision of any such contract (or with notice or lapse of
time or both, would be in violation of or default under any material provision
of any such contract).
6P. Permits. The Company and the ChipPAC Subsidiaries have all
-------
permits required for the conduct of their business as presently conducted. Each
such permit is valid, binding and in full force and effect; and to the knowledge
of the Company, neither the Company nor any ChipPAC Subsidiary is in default (or
with the giving of notice or lapse of time or both, would be in default) under
any such permit in any material respect.
6Q. Environmental Matters.
---------------------
(a) No written notification of a Release of a Hazardous Material has
been filed by or on behalf of the Company or any ChipPAC Subsidiary, and no site
or facility, or related offsite disposal site, is listed or is proposed for
listing on the NPL, CERCLIS or any similar list of sites requiring investigation
or clean-up under the laws of any other country.
(b) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, or that are in the possession of
the Company or the ChipPAC Subsidiaries, in relation to any site or facility now
or previously owned, operated or leased by the Company or any ChipPAC Subsidiary
which have not been made available to Purchaser prior to the execution of this
Agreement.
(c) Neither the Company nor any of the ChipPAC Subsidiaries has
treated, stored, disposed of, handled or released any Hazardous Material or
owned or operated any property or facility (and no such property or facility is
contaminated by any Hazardous Material) in any manner that has given or would
give rise to any liabilities or remedial obligations pursuant to any
Environmental Law.
6R. Insurance. The Company has made available or caused to be made
---------
available to Purchaser copies of each insurance policy (including policies
providing property, casualty, liability, and worker's compensation coverage and
bond and surety arrangements, but excluding policies no longer in force) with
respect to which the Company or any of the ChipPAC Subsidiaries is a party, or
named insured, or otherwise the beneficiary of coverage as of the date of this
Agreement.
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<PAGE>
6S. No Brokers. All negotiations relative to this Agreement and the
----------
other agreements contemplated hereby and the transactions contemplated hereby
and thereby have been carried out by the Company directly with Purchaser without
the intervention of any person on behalf of the Company in such a manner as to
give rise to any valid claim by any person against Purchaser or against the
Company for a finder's fee, brokerage commission or similar payment.
6T. No Other Representations. Notwithstanding anything to the
------------------------
contrary contained in this Agreement, it is the explicit intent, understanding
and agreement of each party hereto that the Company is not making any
representation or warranty whatsoever, express or implied, except those
representations and warranties contained in this Section 6 and in any
certificate delivered pursuant to subparagraph 2H(i). In particular, the Company
makes no representation or warranty to Purchaser with respect to (a) the
information made available to Purchaser or any of its representatives in
connection with Purchaser's consideration of the transactions contemplated by
this Agreement and (b) any financial projection or forecast furnished to
Purchaser by, or otherwise relating to, the Company or any of the ChipPAC
Subsidiaries, other than the fact that such projections and forecasts were
prepared in good faith and based upon assumptions believed to be reasonable.
With respect to all such projections and forecasts, Purchaser hereby
acknowledges and agrees that (i) there are uncertainties inherent in attempting
to make such projections and forecasts, (ii) Purchaser is aware of such
uncertainties, (iii) Purchaser is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections and forecasts,
including projections and forecasts relating to the businesses and operations of
the Company and the ChipPAC Subsidiaries that were previously conducted by
Hyundai and (iv) Purchaser shall have no claim against the Company or any of its
representatives or Affiliates with respect to such projections or forecasts.
6U. Assets. All of the Company's and the ChipPAC Subsidiaries'
------
buildings, improvements, machinery, equipment and other tangible personal
property and assets are in good condition and repair in all material respects,
ordinary wear and tear excepted, and are usable in the ordinary course of
business and, as of the Closing Date, all of the assets of each of the Company
and the ChipPAC Subsidiaries will be free and clear of all liens and
encumbrances other than Permitted Encumbrances. The assets of the Company and
the ChipPAC Subsidiaries (together with the services to be made available to the
Company and the ChipPAC Subsidiaries pursuant to transitional service and
similar agreements with Hyundai) include all assets (including all Intellectual
Property) necessary to the conduct of the business of the Company and the
ChipPAC Subsidiaries as presently conducted.
6V. Product Warranty. No products heretofore sold by the Company or
----------------
any of the ChipPAC Subsidiaries are now subject to any guarantee or warranty
other than ChipPAC's standard terms and conditions of sale. The reserve for
product warranty liability recorded in the Company's financial statements is
sufficient to provide for the Company's warranty liability for any product
designed, manufactured, merchandised, serviced, distributed or sold by the
Company or the
-13-
<PAGE>
ChipPAC Subsidiaries, or other damages in connection with such sales or
deliveries at any time prior to the Closing Date.
Section 7. Representations and Warranties of Purchaser. Purchaser
-------------------------------------------
hereby represents and warrants to the Company as follows:
7A. Corporate Existence and Authority. Purchaser is a corporation
---------------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. Purchaser has full corporate power and authority to execute
and deliver this Agreement and the other agreements contemplated hereby to which
it is a party, to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby.
7B. Authorization; Binding Effect. The execution and delivery by
-----------------------------
Purchaser of this Agreement and the other agreements contemplated hereby to
which it is a party, and the performance by Purchaser of its obligations
hereunder and thereunder, have been duly and validly authorized by its board of
directors, no other corporate action on the part of Purchaser or any of its
stockholders being necessary. This Agreement has been duly and validly executed
by Purchaser, and contemporaneously with the Closing, Purchaser shall duly and
validly execute the other agreements contemplated hereby, and upon the execution
and delivery by the other parties thereto, will constitute legal, valid and
binding obligations of Purchaser, enforceable against Purchaser in accordance
with their terms, subject to the effect and limitations of any bankruptcy,
insolvency, reorganization, moratorium or other similar law affecting the
enforcement of creditors' rights generally and to general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
7C. Absence of Conflicts. The execution and delivery by Purchaser of
--------------------
this Agreement does not, and the execution and delivery by Purchaser of the
other agreements contemplated hereby to which it is a party, the performance by
Purchaser of its obligations under this Agreement and such other agreements and
the consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of the certificate of
incorporation or bylaws of Purchaser; (b) conflict with or result in a violation
or breach of any law or order applicable to Purchaser or any of its assets or
properties; or (c) (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Purchaser to obtain any consent or approval of any person as a
result or under the terms of, or (iv) result in or give to any person any right
of termination, cancellation, acceleration or modification with respect to, or
(v) result in the creation or imposition of any lien or encumbrance upon
Purchaser or any of its assets or properties under, any contract to which
Purchaser is a party or by which any of its assets and properties is bound.
7D. Governmental Approvals and Filings. No consent, approval or
----------------------------------
action of, filing with or notice to any governmental or regulatory authority on
the part of Purchaser or any of
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<PAGE>
its stockholders is required in connection with the execution, delivery and
performance of this Agreement or the other agreements to which it is a party or
the consummation of the transactions contemplated hereby or thereby, except
where the failure to obtain any such consent, approval or action, to make any
such filing or to give any such notice could not reasonably be expected to have
a material adverse effect on the Company after the Closing or to delay or have a
material adverse effect on the ability of Purchaser to consummate the
transactions contemplated by this Agreement or any of the other agreements
contemplated hereby or to perform any of its obligations hereunder or thereunder
or where required solely as a result of the identity or the legal or regulatory
status of the Company or any of its Affiliates.
7E. No Brokers. All negotiations relative to this Agreement and the
----------
other agreements contemplated hereby and the transactions contemplated hereby
and thereby have been carried out by Purchaser directly with the Company or its
representatives without the intervention of any person on behalf of Purchaser in
such a manner as to give rise to any valid claim by any person against the
Company or any of its Affiliates for a finder's fee, brokerage commission or
similar payment.
7F. Purchaser's Investment Representations. Purchaser represents and
--------------------------------------
warrants that it is acquiring the Restricted Securities purchased hereunder or
acquired pursuant hereto for its own account with the present intention of
holding such securities for purposes of investment, and that it has no intention
of selling such securities in a public distribution in violation of the federal
securities laws or any applicable state securities laws; provided that nothing
contained herein shall prevent Purchaser and subsequent holders of Restricted
Securities from transferring such securities in compliance with the provisions
of Section 5 hereof. Each certificate or instrument representing Restricted
Securities shall be imprinted with a legend in substantially the following form:
"The securities represented by this certificate were originally
issued on August 5, 1999, and have not been registered under the
Securities Act of 1933, as amended. The transfer of the
securities represented by this certificate is subject to the
conditions specified in the Purchase Agreement, dated as of
August 5, 1999, as amended and modified from time to time,
between the issuer (the "Company") and the purchaser of such
securities, and the Company reserves the right to refuse the
transfer of such securities until such conditions have been
fulfilled with respect to such transfer. A copy of such
conditions shall be furnished by the Company to the holder hereof
upon written request and without charge."
Section 8. Definitions. For the purposes of this Agreement, the
-----------
following terms have the meanings set forth below:
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<PAGE>
"Affiliate" of any particular person or entity means any other person
---------
or entity controlling, controlled by or under common control with such
particular person or entity.
"Common Stock" means, collectively, the Class A Common, Class B
------------
Common, Class L Common and any capital stock of any class of the Company
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Company.
"Benefit Plan" means any Plan established by the Company or any of the
------------
ChipPAC Subsidiaries or any predecessor of any of the foregoing, existing at the
date hereof or at the Closing Date to which the Company or any ChipPAC
Subsidiary contributes or has contributed, or under which any employee, former
employee or director of the Company or any ChipPAC Subsidiary or any beneficiary
thereof is covered, is eligible for coverage or has benefit rights in such
person's capacity as an employee or former employee or director of the Company
or any ChipPAC Subsidiary.
"Environmental Law" means any statute, enactment, administrative
-----------------
agency rule or promulgation, regulation, ordinance, or other law or order
relating to the regulation or protection of human health, safety or the
environment or to emissions, discharges, generation, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Hazardous Material.
"Hazardous Material" means (i) any petroleum or petroleum products,
------------------
flammable explosives, radioactive materials, asbestos in any friable form, urea
formaldehyde foam insulation and transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls (PCBs); (ii) any
chemicals or other materials or substances which are now or hereafter become
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants" or words of similar
import under any Environmental Law; and (iii) any other chemical or other
material or substance, exposure to which is now or hereafter prohibited, limited
or regulated by any governmental or regulatory authority under any Environmental
Law.
"Initial Public Offering" means a public offering and sale of the
-----------------------
Company's common stock pursuant to an effective registration statement under the
Securities Act, if immediately thereafter the Company has publicly held common
stock listed on a national securities exchange or the NASD automated quotation
system.
-16-
<PAGE>
"Intellectual Property" means all patents and patent rights,
---------------------
trademarks and trademark rights, trade names and trade name rights, service
marks and service mark rights, service names and service name rights, brand
names, inventions, copyrights and copyright rights, processes, formulae, trade
dress, business and product names, logos, slogans, trade secrets, industrial
models, processes, designs, methodologies, computer programs (including all
source codes) and related documentation, technical information, manufacturing,
engineering and technical drawings, know-how, all pending applications for and
registrations of patents, trademarks, service marks and copyrights, and all
other intellectual property rights of every kind or nature.
"Permitted Encumbrance" means any of the following: (i) any lien or
----------------------
encumbrance granted to any financing source of the Company or any of its
Subsidiaries, (ii) any lien or encumbrance for taxes not yet due or delinquent
or being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with generally accepted accounting
principles, (iii) any statutory lien or encumbrance arising in the ordinary
course of business by operation of law with respect to a liability that is not
yet due or delinquent or (iv) any imperfection of title or similar lien or
encumbrance which does not materially impair the Company's or the ChipPAC
Subsidiaries' use of the property subject to such lien or encumbrance.
"Person" means an individual, a partnership, a corporation, an
------
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Release" means any release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
"Restricted Securities" means (i) the Class A Preferred issued
---------------------
hereunder, (ii) the Warrant issued pursuant to paragraph 4D hereof, (iii) the
Common Stock issued upon conversion of Class A Preferred or upon exercise of the
Warrant and (iv) any securities issued with respect to the securities referred
to in clauses (i), (ii) or (iii) above by way of a stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Restricted
Securities, such securities shall cease to be Restricted Securities when they
have (a) been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, (b) been distributed
to the public through a broker, dealer or market maker pursuant to Rule 144 (or
any similar provision then in force) under the Securities Act or become eligible
for sale pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act or (c) been otherwise transferred and new certificates for them
not bearing the Securities Act legend set forth in paragraph 7F have been
delivered by the Company in accordance with paragraph 5B. Whenever any
particular securities cease to be Restricted Securities, the holder thereof
shall be entitled to receive from the Company, without
-17-
<PAGE>
expense, new securities of like tenor not bearing a Securities Act legend of the
character set forth in paragraph 7F.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar federal law then in force.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
-----------------------
as amended, or any similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
----------------------------------
agency succeeding to the functions thereof.
"Subsidiary" means, with respect to any Person, any corporation,
----------
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability company, partnership, association or other business entity.
"Underlying Common Stock" means (i) the Common Stock issued or
-----------------------
issuable upon conversion of the Class A Preferred or upon exercise of the
Warrant and (ii) any Common Stock issued or issuable with respect to the
securities referred to in clause (i) above by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. For purposes of this Agreement, any
Person who holds Class A Preferred or the Warrant shall be deemed to be the
holder of the Underlying Common Stock obtainable upon conversion of the Class A
Preferred or exercise of the Warrant in connection with the transfer thereof or
otherwise regardless of any restriction or limitation on the conversion of the
Class A Preferred or exercise of the Warrant, such Underlying Common Stock shall
be deemed to be in existence, and such Person shall be entitled to exercise the
rights of a holder of Underlying Common Stock hereunder. As to any particular
shares of Underlying Common Stock, such shares shall cease to be Underlying
Common Stock when they have been (a) effectively registered under the Securities
Act and disposed of in accordance with the registration statement covering them,
(b) distributed to the public through a broker, dealer or market maker pursuant
to Rule 144 under the
-18-
<PAGE>
Securities Act (or any similar provision then in force) or (c) repurchased by
the Company or any Subsidiary.
Section 9. Miscellaneous.
-------------
9A. Expenses. Except as otherwise provided herein, each party shall
--------
bear its own expenses arising in connection with this Agreement and the
transactions contemplated hereby. Effective upon the Closing, the Company shall
pay a flat fee of $20,000 to Purchaser for Purchaser's expenses (whether
internal or external) arising in connection with this Agreement and the
transactions contemplated hereby.
9B. Remedies. Each holder of Underlying Common Stock shall have all
--------
rights and remedies set forth in this Agreement, the Articles of Incorporation
and all rights and remedies which such holders have been granted at any time
under any other agreement or contract and all of the rights which such holders
have under any law.
9C. Consent to Amendments. The provisions of this Agreement may
---------------------
be amended only if the Company has obtained the written consent of the holders
of not less than a majority of the outstanding shares of Underlying Common
Stock. No other course of dealing between the Company and Purchaser or any
delay in exercising any rights hereunder or under the Articles of Incorporation
shall operate as a waiver of any rights of Purchaser.
9D. Survival of Representations and Warranties. All representations
------------------------------------------
and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby for a period of only
twenty-four (24) months following the Closing Date.
9E. Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for Purchaser's benefit as a purchaser or
holder of Underlying Common Stock are also for the benefit of, and enforceable
by, any subsequent holder of such Underlying Common Stock.
9F. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
-19-
<PAGE>
9G. Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts (any one or which may be delivered by facsimile
transmission), any one of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Agreement.
9H. Descriptive Headings; Interpretation. The descriptive headings
------------------------------------
of this Agree ment are inserted for convenience only and do not constitute a
substantive part of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
9I. Governing Law. THE CORPORATE LAW OF THE STATE OF CALIFORNIA
-------------
SHALL GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS AND
OBLIGATIONS OF THE COMPANY AND ITS STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS
AGREEMENT AND THE EXHIBITS HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF
DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY OTHER JURISDICTION OTHER THAN THE STATE OF DELAWARE.
9J. Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable express courier service
(charges prepaid), mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid or by facsimile transmission (with
delivery confirmed by the facsimile operator). Such notices, demands and other
communications shall be sent to the Purchaser and to the Company at the address
indicated below:
Purchaser:
---------
Intel Corporation
2200 Mission College Boulevard
RN6-46
Santa Clara, CA 95052
Facsimile: (408) 765-6038
Attn: M&A Portfolio Manager
-20-
<PAGE>
copy to: Gibson Dunn & Crutcher LLP
1530 Page Mill Road
Palo Alto, CA 94304
Facsimile: (650) 849-5333
Attn: Lawrence Calof
Company:
-------
ChipPAC, Inc.
3151 Coronado Drive
Santa Clara, CA 95054
Facsimile (408) 486-5911
Attn: Dennis McKenna
copy to: Bain Capital, Inc.
One Embarcadero, Suite 2260
San Francisco, CA 94111
Facsimile: (415) 627-1333
Attn: David Dominik
Edward Conard
Prescott Ashe
and to: Citicorp Venture Capital, Ltd.
399 Park Avenue
New York, NY 10043
Facsimile: (212) 888-2940
Attn: Michael Delaney
Paul C. Schorr, IV
and to: Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
Attn: Jeffrey C. Hammes, P.C.
Gary M. Holihan
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
9K. California Corporate Securities Law. THE SALE OF THE
-----------------------------------
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
-21-
<PAGE>
ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE
OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105
OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE
SALE IS SO EXEMPT.
9L. Confidentiality and Non-Disclosure.
----------------------------------
(a) Disclosure of Terms. The terms and conditions of this Agreement
-------------------
and the other agreements contemplated hereby (collectively, the "Financing
Terms"), including their existence, shall be considered confidential information
and shall not be disclosed by any party hereto to any third party except in
accordance with the provisions set forth below.
(b) Press Releases, Etc. No announcement regarding the Financing
--------------------
Terms or Purchaser in a press release, conference, advertisement, announcement,
professional or trade publication, mass marketing materials or otherwise to the
general public may be made without the prior written consent of each of the
parties hereto.
(c) Permitted Disclosures. Notwithstanding the foregoing, (i) any
---------------------
party may disclose any of the Financing Terms or the identity of the Purchaser
to its current or bona fide prospective investors or other financing sources,
investment bankers, lenders, accountants and attorneys; and (ii) Purchaser may
disclose its investment in the Company and the Financing Terms to third parties
or to the public at its sole discretion and, if it does so, the other parties
hereto shall have the right to disclose to third parties any such information
disclosed in a press release or other public announcement by Purchaser.
(d) Legally Compelled Disclosure. In the event that any party is
----------------------------
requested or becomes legally compelled (including without limitation, pursuant
to securities laws and regulations) to disclose the existence of this Agreement,
any of the other agreements contemplated hereby or any of the Financing Terms
hereof in contravention of the provisions of this Section 9L, such party (the
"Disclosing Party") shall provide the other parties (the "Non-Disclosing
Parties") with prompt written notice of that fact so that the appropriate party
may seek (with the cooperation and reasonable efforts of the other parties) a
protective order, confidential treatment or other appropriate remedy. In such
event, the Disclosing Party shall furnish only that portion of the information
which is legally required and shall exercise reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded such information
to the extent reasonably requested by any Non-Disclosing Party.
(e) Other Information. The provisions of this Section 9L shall be in
-----------------
addition to, and not in substitution for, the provisions of any separate
nondisclosure agreement executed by any
-22-
<PAGE>
of the parties hereto with respect to the transactions contemplated hereby.
Additional disclosures and exchange of confidential information between the
Company and Purchaser shall be governed by the terms of the Corporate Non-
Disclosure Agreement No. 0875665, executed by the Company and Purchaser, and any
Confidential Information Transmittal Records (CITR) provided in connection
therewith.
(f) All notices required under this section shall be made pursuant to
Section 9J of this Agreement.
9M. Consideration for Warrant. Purchaser and the Company acknowledge
-------------------------
and agree that the fair market value of the Class A Preferred issued hereunder
is $9,950,000 and the fair market value of the Warrant issued hereunder is
$50,000 and that, for all purposes (including tax and accounting), the
consideration for the issuance of the Warrant shall be allocated as set forth in
this paragraph 9M. Purchaser and the Company shall file their respective
federal, state and local tax returns in a manner which is consistent with such
valuation and allocation and shall not take any contrary position with any
taxing authority.
* * * * *
-23-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
<TABLE>
<CAPTION>
CHIPPAC, INC. INTEL CORPORATION
<S> <C>
By: /s/ Gary Breton By: /s/ Arvind Sodhani
Name: Gary Breton Name: Arvind Sodhani
Title: Vice President Title: Vice President and Treasurer
Date Signed: August 5, 1999 Date Signed: August 5, 1999
Address: 3151 Coronado Drive Address: 2200 Mission College Blvd.
Santa Clara, CA 95054 Santa Clara, CA 95052
Attn: M&A Portfolio Manager
Telephone No.: (408) 486-5901 Telephone No.: (408) 765-1240
Facsimile No.: (408) 486-5911 Facsimile No.: (408) 765-6038
with a copy to: Kirkland & Ellis with a copy to: General Counsel
200 East Randolph Dr. 2200 Mission College Blvd.
Chicago, IL 60601 Santa Clara, CA 95052
Attn: Jeffrey C. Hammes, P.C.
Gary M. Holihan
</TABLE>
[Signature page to Stock Purchase Agreement]
<PAGE>
EXHIBIT 10.16
-------------
CONFIDENTIAL
------------
================================================================================
WARRANT TO PURCHASE
CLASS B COMMON STOCK
ChipPAC, Inc.
AUGUST 5, 1999
================================================================================
<PAGE>
EXHIBIT 10.16
-------------
CONFIDENTIAL
------------
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
1. CERTAIN DEFINITIONS............................................... 1
2. EXERCISE OF WARRANT............................................... 3
3. VALID ISSUANCE; TAXES............................................. 5
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES................. 5
5. CERTIFICATE AS TO ADJUSTMENTS..................................... 7
6. LOSS OR MUTILATION................................................ 7
7. RESERVATION OF WARRANT STOCK...................................... 7
8. TRANSFER AND EXCHANGE............................................. 8
9. RESTRICTIONS ON TRANSFER.......................................... 8
10. COMPLIANCE WITH SECURITIES LAWS................................... 8
11. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS.......................... 9
12. REGISTRATION RIGHTS............................................... 10
13. NOTICES........................................................... 10
14. HEADINGS.......................................................... 10
15. LAW GOVERNING..................................................... 10
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
16. NO IMPAIRMENT..................................................... 10
17. NOTICES OF RECORD DATE............................................ 10
18. SEVERABILITY...................................................... 11
19. COUNTERPARTS...................................................... 11
20. NO INCONSISTENT AGREEMENTS........................................ 11
21. SATURDAYS, SUNDAYS AND HOLIDAYS................................... 11
</TABLE>
ii
<PAGE>
CONFIDENTIAL
------------
THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF CLASS B COMMON
STOCK OR COMMON STOCK ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"). SUCH
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (A) THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN
CONNECTION WITH SUCH DISPOSITION OR (B) THE SALE OF SUCH SECURITIES IS MADE
PURSUANT TO SECURITIES AND EXCHANGE COMMISSION RULE 144.
WARRANT TO PURCHASE
CLASS B COMMON STOCK OF
ChipPAC, Inc.
(Subject to Adjustment)
NO. W-1
This Certifies That, for value received, Intel Corporation, a Delaware
corporation, or its permitted registered assigns (the "Holder") is entitled,
------
subject to the terms and conditions of this Warrant, at any time after the
closing of an IPO (the "Effective Date"), and before the occurrence of an
--------------
Expiration Event, to purchase from ChipPAC, Inc., a California corporation (the
"Company"), a number of shares of Warrant Stock of the Company determined by
-------
dividing five million dollars ($5,000,000) by 80% of the IPO Price, at a price
per share equal to 80% of the IPO Price ("Purchase Price"). Both the number of
--------------
shares of Warrant Stock purchasable upon exercise of this Warrant and the
Purchase Price are subject to adjustment and change as provided herein. This
Warrant is issued pursuant to that certain Stock Purchase Agreement, dated
August 5, 1999 (the "Purchase Agreement"), between the Company and Holder.
------------------
1. CERTAIN DEFINITIONS. As used in this Warrant, the following terms shall
have the following respective meanings:
"Common Stock" shall mean collectively the Company's Class A Common Stock,
------------
par value $.01 per share, the Class B Common Stock and any capital stock of any
class of the Company hereafter authorized which is not limited to a fixed sum or
percentage of par or stated value with respect to the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company.
1
<PAGE>
"Class B Common Stock" shall mean the Company's non-voting Class B Common
--------------------
Stock, par value $.01 per share.
"Expiration Date" shall mean the date of an Expiration Event.
---------------
"Expiration Event" shall mean 5:00 p.m. California time on the earlier of
----------------
(a) the 180th day following the closing of an IPO, (b) the acquisition of the
Company in a transaction in which the rights provided under Section 3 of the
Shareholders Agreement are triggered (an "Expiration Acquisition") or (c) August
----------------------
5, 2009.
"Fair Market Value" of a share of Warrant Stock as of a particular date
-----------------
shall mean:
(a) If traded on a securities exchange or the Nasdaq National Market,
the Fair Market Value shall be deemed to be the average of the closing prices of
the Common Stock of the Company on such exchange or market over the five (5)
business days ending immediately prior to the applicable date of valuation;
(b) If actively traded over-the-counter, the Fair Market Value shall
be deemed to be the average of the closing bid prices over the thirty (30) day
period ending immediately prior to the applicable date of valuation; and
(c) If there is no active public market, the Fair Market Value shall
be the value thereof, as agreed upon by the Company and the Holder; provided,
--------
however, that if the Company and the Holder cannot agree on such value, such
- -------
value shall be determined by an independent valuation firm experienced in
valuing businesses such as the Company and jointly selected in good faith by the
Company and the Holder. Fees and expenses of the valuation firm shall be borne
equally for by the Company and the Holder.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
-------
1976, as amended.
"IPO" shall mean the closing of the Company's first underwritten public
---
offering pursuant to an effective registration statement under the Securities
Act, covering the offer and sale of Common Stock.
"IPO Price" shall mean the price to the public, before deducting for
---------
underwriting commissions, stated on the cover page of the final prospectus
filed with the SEC in connection with an IPO.
2
<PAGE>
"Registered Holder" shall mean any Holder in whose name this Warrant is
-----------------
registered upon the books and records maintained by the Company.
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"SEC" shall mean the United States Securities and Exchange Commission.
---
"Shareholders Agreement" shall mean the Shareholders Agreement, dated as of
----------------------
August 5, 1999, by and among the Company, Holder and the other holders of the
Company's equity securities, as amended from time to time.
"Subsidiary" shall mean an entity in which a party owns 50% or more of the
----------
outstanding equity (or profits) interests or voting power or has the power, by
contract or otherwise, to elect a majority of the directors or other similar
managing body.
"Warrant" shall mean this Warrant and any warrant delivered in substitution
-------
or exchange therefor as provided herein.
"Warrant Stock" shall mean the Class B Common Stock of the Company and any
-------------
other securities at any time receivable or issuable upon exercise of this
Warrant.
2. EXERCISE OF WARRANT.
2.1. Payment. Subject to compliance with the terms and conditions of this
-------
Warrant and applicable securities laws, this Warrant may be exercised, in whole
or in part at any time or from time to time, on or before the Expiration Date by
the delivery (including, without limitation, delivery by facsimile) of the form
of Notice of Exercise attached hereto as Exhibit 1 (the "Notice of Exercise"),
--------- ------------------
duly executed by the Holder, at the principal office of the Company, and as soon
as practicable after such date, surrendering:
(a) this Warrant at the principal office of the Company, and
(b) payment, (i) in cash, by wire transfer of immediately available
funds, (ii) by cancellation by the Holder of indebtedness of the Company to the
Holder or (iii) by a combination of (i) and (ii), of an amount equal to the
product obtained by multiplying the number of shares of Class B Common Stock
being purchased upon such exercise by the then effective Purchase Price (the
"Exercise Amount"), except that if the Holder is subject to HSR Act Restrictions
----------------
(as defined in Section 2.5 below), the Exercise Amount shall be paid to the
Company upon termination of all HSR Act Restrictions.
3
<PAGE>
2.2. Net Issue Exercise. In lieu of the payment methods set forth in
------------------
Section 2.1(b) above, the Holder may elect to exchange all or some of the
Warrant for shares of Warrant Stock equal to the value of the amount of the
Warrant being exchanged on the date of exchange. If the Holder elects to
exchange this Warrant as provided in this Section 2.2, the Holder shall tender
to the Company the Warrant for the amount being exchanged, along with written
notice of the Holder's election to exchange some or all of the Warrant, and the
Company shall issue to the Holder the number of shares of the Warrant Stock
computed using the following formula:
X = Y (A-B)
-------
A
Where:
X = the number of shares of Warrant Stock to be issued to the Holder;
Y = the number of shares of Warrant Stock purchasable under the amount
of the Warrant being exchanged (as adjusted to the date of such
calculation);
A = the Fair Market Value of one share of the Company's Common Stock;
and
B = Purchase Price (as adjusted to the date of such calculation).
All references herein to an "exercise" of the Warrant shall include an
exchange pursuant to this Section 2.2.
2.3. "Easy Sale" Exercise. In lieu of the payment methods set forth in
-------------------
Section 2.1(b) above, when permitted by law and applicable regulations
(including Nasdaq and NASD rules), the Holder, may pay the Exercise Amount
through a "same day sale" commitment from the Holder (and if applicable a
broker-dealer that is a member of the National Association of Securities Dealers
(a "NASD Dealer")), whereby the Holder irrevocably elects to exercise this
Warrant and to sell a portion of the Warrant Stock so purchased to pay for the
Purchase Price and the Holder (or, if applicable, the NASD Dealer) commits upon
sale (or, in the case of the NASD Dealer, upon receipt) of such Warrant Stock to
forward the Exercise Amount directly to the Company.
2.4. Stock Certificates; Fractional Shares. As soon as practicable on or
-------------------------------------
after any date of exercise of this Warrant pursuant to this Section 2, the
Company shall issue and deliver to the person or persons entitled to receive the
same a certificate or certificates for the number of whole shares of Warrant
Stock issuable upon such exercise, together with cash in lieu of any fraction of
a share equal to such fraction of the current Fair Market Value of one whole
share of Warrant
4
<PAGE>
Stock as of the date of exercise of this Warrant. No fractional shares or scrip
representing fractional shares shall be issued upon an exercise of this Warrant.
2.5. HSR Act. The Company hereby acknowledges that exercise of this
-------
Warrant by the Holder may subject the Company or the Holder to the filing
requirements of the HSR Act and that the Holder may be prevented from exercising
this Warrant until the expiration or early termination of all waiting periods
imposed by the HSR Act ("HSR Act Restrictions"). If on or before the Expiration
--------------------
Date the Holder has sent the Notice of Exercise to Company and the Holder has
not been able to complete the exercise of this Warrant prior to the Expiration
Date because of HSR Act Restrictions, the Holder shall be entitled to complete
the process of exercising this Warrant in accordance with the procedures
contained herein notwithstanding the fact that completion of the exercise of
this Warrant would take place after the Expiration Date.
2.6. Partial Exercise; Effective Date of Exercise. In case of any partial
--------------------------------------------
exercise of this Warrant, the Company shall cancel this Warrant upon surrender
hereof and shall execute and deliver a new Warrant of like tenor and date for
the balance of the shares of Warrant Stock purchasable hereunder. This Warrant
shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above. However,
if the Holder is subject to HSR Act Restrictions, this Warrant shall be deemed
to have been exercised on the date immediately following the date of the
expiration of all HSR Act Restrictions. The person entitled to receive the
shares of Warrant Stock issuable upon exercise of this Warrant shall be treated
for all purposes as the holder of record of such shares as of the close of
business on the date the Holder is deemed to have exercised this Warrant.
3. VALID ISSUANCE; TAXES. All shares of Warrant Stock issued upon the
exercise of this Warrant shall be validly issued, fully paid and non-assessable,
and the Company shall pay all taxes and other governmental charges that may be
imposed in respect of the issue or delivery thereof. The Company shall not be
required to pay any tax or other charge imposed in connection with any transfer
involved in the issuance of any certificate for shares of Warrant Stock in any
name other than that of the Registered Holder of this Warrant, and in such case
the Company shall not be required to issue or deliver any stock certificate or
security until such tax or other charge has been paid, or it has been
established to the Company's reasonable satisfaction that no tax or other charge
is due.
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of shares of
Warrant Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities or property receivable or issuable upon exercise of this
Warrant) and the Purchase Price are subject to adjustment upon occurrence of the
following events:
5
<PAGE>
4.1. Adjustment for Stock Splits, Stock Subdivisions or Combinations of
------------------------------------------------------------------
Shares. The Purchase Price of this Warrant shall be proportionally decreased
- ------
and the number of shares of Warrant Stock issuable upon exercise of this Warrant
(or any shares of stock or other securities at the time issuable upon exercise
of this Warrant) shall be proportionally increased to reflect any stock split or
subdivision of the Warrant Stock. The Purchase Price of this Warrant shall be
proportionally increased and the number of shares of Warrant Stock issuable upon
exercise of this Warrant (or any shares of stock or other securities at the time
issuable upon exercise of this Warrant) shall be proportionally decreased to
reflect any combination of the Warrant Stock.
4.2. Adjustment for Dividends or Distributions of Stock or Other Securities
----------------------------------------------------------------------
or Property. In case the Company shall make or issue, or shall fix a record
- -----------
date for the determination of eligible holders entitled to receive, a dividend
or other distribution with respect to the Warrant Stock (or any shares of stock
or other securities at the time issuable upon exercise of the Warrant) payable
in (a) securities of the Company or (b) assets (excluding cash dividends), then,
in each such case, the Holder of this Warrant on exercise hereof at any time
after the consummation, effective date or record date of such dividend or other
distribution, shall receive, in addition to the shares of Warrant Stock (or such
other stock or securities) issuable on such exercise prior to such date, and
without the payment of additional consideration therefor, the securities or such
other assets of the Company to which such Holder would have been entitled upon
such date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares or all other additional stock available by
it as aforesaid during such period giving effect to all adjustments called for
by this Section 4.
4.3. Reclassification. If the Company, by reclassification of securities
----------------
or otherwise, shall change any of the securities as to which purchase rights
under this Warrant exist into the same or a different number of securities of
any other class or classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the securities that were subject to the
purchase rights under this Warrant immediately prior to such reclassification or
other change and the Purchase Price therefore shall be appropriately adjusted,
all subject to further adjustment as provided in this Section 4. No adjustment
shall be made pursuant to this Section 4.3 upon any conversion or redemption of
the Warrant Stock which is the subject of Section 4.5.
4.4. Adjustment for Capital Reorganization, Merger or Consolidation. In
--------------------------------------------------------------
case of any capital reorganization of the capital stock of the Company (other
than an Expiration Acquisition or a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), or any merger or
consolidation of the Company with or into another corporation (other than an
Expiration Acquisition), or the sale of all or substantially all the assets of
the Company (other than an Expiration Acquisition), then, and in each such case,
as a part of such
6
<PAGE>
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the Holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Purchase Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 4. The foregoing provisions of this Section 4.4 shall similarly
apply to successive reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other corporation that are at
the time receivable upon the exercise of this Warrant. If the per-share
consideration payable to the Holder hereof for shares in connection with any
such transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the Board of
Directors. In all events, appropriate adjustment (as determined in good faith by
the Board of Directors) shall be made in the application of the provisions of
this Warrant with respect to the rights and interests of the Holder after the
transaction, to the end that the provisions of this Warrant shall be applicable
after that event, as near as reasonably may be, in relation to any shares or
other property deliverable after that event upon exercise of this Warrant.
4.5. Conversion of Warrant Stock. In case all or any portion of the
---------------------------
authorized and outstanding shares of Warrant Stock of the Company are redeemed
or converted or reclassified into other securities or property pursuant to the
Company's Articles of Incorporation or otherwise, or the Warrant Stock otherwise
ceases to exist, then, in such case, the Holder of this Warrant, upon exercise
hereof at any time after the date on which the Warrant Stock is so redeemed or
converted, reclassified or ceases to exist (the "Termination Date"), shall
----------------
receive, in lieu of the number of shares of Warrant Stock that would have been
issuable upon such exercise immediately prior to the Termination Date, the
shares of Common Stock that would have been received if this Warrant had been
exercised in full and the Warrant Stock received thereupon had been
simultaneously converted immediately prior to the Termination Date, all subject
to further adjustment as provided in this Warrant. Additionally, the Purchase
Price shall be immediately adjusted to equal the quotient obtained by dividing
(a) the aggregate Purchase Price of the maximum number of shares of Warrant
Stock for which this Warrant was exercisable immediately prior to the
Termination Date by (b) the number of shares of Common Stock for which this
Warrant is exercisable immediately after the Termination Date, all subject to
further adjustment as provided herein.
5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment in the
Purchase Price, or number or type of shares issuable upon exercise of this
Warrant, the Chief Financial Officer or Controller of the Company shall compute
such adjustment in accordance
7
<PAGE>
with the terms of this Warrant and prepare a certificate setting forth such
adjustment and showing in detail the facts upon which such adjustment is based,
including a statement of the adjusted Purchase Price. The Company shall promptly
send (by facsimile and by either first class mail, postage prepaid or overnight
delivery) a copy of each such certificate to the Holder.
6. LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory to the
Company of the ownership of and the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to it, and (in the case
of mutilation) upon surrender and cancellation of this Warrant, the Company will
execute and deliver in lieu thereof a new Warrant of like tenor as the lost,
stolen, destroyed or mutilated Warrant.
7. RESERVATION OF WARRANT STOCK. The Company hereby covenants that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant such number of shares of Warrant Stock or other shares of capital stock
of the Company as are from time to time issuable upon exercise of this Warrant
and, from time to time, will take all steps necessary to amend its Articles of
Incorporation to provide sufficient reserves of shares of Warrant Stock issuable
upon exercise of this Warrant (and shares of its Common Stock for issuance on
conversion of such Warrant Stock). All such shares shall be duly authorized, and
when issued upon such exercise, shall be validly issued, fully paid and non-
assessable, free and clear of all liens, security interests, charges and other
encumbrances or restrictions on sale and free and clear of all preemptive
rights, except encumbrances or restrictions arising under federal or state
securities laws. Issuance of this Warrant shall constitute full authority to the
Company's officers who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for shares of Warrant Stock and
Common Stock upon the exercise of this Warrant.
8. TRANSFER AND EXCHANGE. This Warrant and all rights hereunder may be
transferred in whole and not in part, subject to the terms and conditions of
this Warrant and compliance with all applicable securities laws, only (a) to a
Subsidiary of Holder; or (b) subject to the terms and conditions contained
therein, in accordance with that certain Shareholders Agreement, dated the date
hereof, among the Company, the Holders and certain other persons. Permitted
transfers shall be made on the books of the Company maintained for such purpose
at the principal office of the Company referred to above, by the Registered
Holder hereof in person, or by duly authorized attorney, upon surrender of this
Warrant properly endorsed and upon payment of any necessary transfer tax or
other governmental charge imposed upon such transfer. Each taker and holder of
this Warrant, by taking or holding the same, consents and agrees that when this
Warrant shall have been so endorsed, the person in possession of this Warrant
may be treated by the Company, and all other persons dealing with this Warrant,
as the absolute owner hereof for any purpose and as the person entitled to
exercise the rights represented hereby, any notice to the contrary
notwithstanding; provided, however, that until a transfer of this Warrant is
-------- -------
8
<PAGE>
duly registered on the books of the Company, the Company may treat the
Registered Holder hereof as the owner for all purposes.
9. RESTRICTIONS ON TRANSFER. The Holder, by acceptance hereof, agrees that,
absent an effective registration statement filed with the SEC under the
Securities Act, covering the disposition or sale of this Warrant or the Warrant
Stock issued or issuable upon exercise hereof or the Common Stock issuable upon
conversion thereof, as the case may be, and registration or qualification under
applicable state securities laws, such Holder will not sell, transfer, pledge,
or hypothecate any or all such Warrants, Warrant Stock, or Common Stock, as the
case may be, unless either (a) the Company has received an opinion of counsel,
in form and substance reasonably satisfactory to the Company, to the effect that
such registration is not required in connection with such disposition or (b) the
sale of such securities is made pursuant to SEC Rule 144.
10. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the
Holder hereby represents, warrants and covenants: (a) that any shares of
Warrant Stock purchased upon exercise of this Warrant or acquired upon
conversion thereof shall be acquired for investment only and not with a view to,
or for sale in connection with, any distribution thereof; (b) that the Holder
has had such opportunity as such Holder has deemed adequate to obtain from
representatives of the Company such information as is necessary to permit the
Holder to evaluate the merits and risks of its investment in the Company; (c)
that the Holder is able to bear the economic risk of holding such shares as may
be acquired pursuant to the exercise of this Warrant for an indefinite period;
(d) that the Holder understands that the shares of Warrant Stock acquired
pursuant to the exercise of this Warrant or acquired upon conversion thereof
will not be registered under the Securities Act (unless otherwise required
pursuant to exercise by the Holder of the registration rights, if any,
previously granted to the Registered Holder) and will be "restricted securities"
within the meaning of SEC Rule 144 and that the exemption from registration
under Rule 144 will not be available for at least one year from the date of
exercise of this Warrant, subject to any special treatment by the SEC for
exercise of this Warrant pursuant to Section 2.2, and even then will not be
available unless a public market then exists for the stock, adequate information
concerning the Company is then available to the public, and other terms and
conditions of Rule 144 are complied with; and (e) that all stock certificates
representing shares of Warrant Stock issued to the Holder upon exercise of this
Warrant or upon conversion of such shares may have affixed thereto a legend
substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
9
<PAGE>
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
11. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not entitle
the Holder to any voting rights or other rights as a stockholder of the Company.
In the absence of affirmative action by such Holder to purchase Warrant Stock by
exercise of this Warrant or Common Stock upon conversion thereof, no provisions
of this Warrant, and no enumeration herein of the rights or privileges of the
Holder hereof shall cause such Holder hereof to be a stockholder of the Company
for any purpose.
12. REGISTRATION RIGHTS. All shares of Class B Common Stock or Common Stock
issuable upon conversion of the shares of Warrant Stock issuable upon exercise
of this Warrant shall be "Intel Registrable Securities" or such other definition
of securities entitled to registration rights pursuant to the Registration
Agreement, dated as of the date hereof, between the Company, the Holder and
certain other persons, and are entitled, subject to the terms and conditions of
that agreement, to all registration rights granted to holders of Registrable
Securities thereunder.
13. NOTICES. All notices and other communications from the Company to the
Holder shall be given in accordance with the Purchase Agreement.
14. HEADINGS. The headings in this Warrant are for purposes of convenience
in reference only, and shall not be deemed to constitute a part hereof.
15. LAW GOVERNING. This Warrant shall be construed and enforced in
accordance with the governing law of the Purchase Agreement.
16. NO IMPAIRMENT. The Company will not, by amendment of its Articles of
Incorporation or bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the
10
<PAGE>
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Registered Holder of this Warrant against impairment. Without
limiting the generality of the foregoing, the Company: (a) will not increase the
par value of any shares of stock issuable upon the exercise of this Warrant
above the amount payable therefor upon such exercise and (b) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares of Warrant Stock upon
exercise of this Warrant.
17. NOTICES OF RECORD DATE. In case:
17.1. the Company shall take a record of the holders of its Warrant
Stock, Common Stock (or other stock or securities at the time receivable upon
the exercise of this Warrant), for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase any
shares of stock of any class or any other securities or to receive any other
right; or
17.2. of any consolidation or merger of the Company with or into
another corporation, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of all
or substantially all of the assets of the Company to another corporation in
which holders of the Company's stock are to receive stock, securities or
property of another corporation; or
17.3. of any voluntary dissolution, liquidation or winding-up of the
Company; or
17.4. of any redemption or conversion of all outstanding Common Stock
or Warrant Stock; then, and in each such case, the Company will mail or cause to
be mailed to the Registered Holder of this Warrant a notice specifying, as the
case may be, (a) the date on which a record is to be taken for the purpose of
such dividend, distribution or right or (b) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation, winding-up, redemption or conversion is to take place,
and the time, if any is to be fixed, as of which the holders of record of
Warrant Stock, Common Stock or (such stock or securities as at the time are
receivable upon the exercise of this Warrant), shall be entitled to exchange
their shares of Warrant Stock, Common Stock (or such other stock or securities),
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be delivered at least thirty (30) days prior to
the date therein specified.
18. SEVERABILITY. If any term, provision, covenant or restriction of this
Warrant is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the
11
<PAGE>
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
19. COUNTERPARTS. For the convenience of the parties, any number of
counterparts of this Warrant may be executed by the parties hereto and each such
executed counterpart shall be, and shall be deemed to be, an original
instrument.
20. NO INCONSISTENT AGREEMENTS. The Company will not on or after the date of
this Warrant enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Holders of this Warrant or otherwise
conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to holders of the Company's securities under any other
agreements, except rights that have been waived.
21. SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a
Saturday, Sunday or legal holiday, the Expiration Date shall automatically be
extended until 5:00 p.m. the next business day.
[The remainder of this page is intentionally left blank.]
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
August 5, 1999.
INTEL CORPORATION ChipPAC, Inc.
By: /S/ Arvind Sodhani By: /S/ Gary Breton
--------------------------------- --------------------------------
Name: Arvind Sodhani Name: Gary Breton
------------------------------- ------------------------------
Title: Vice President and Treasurer Title: Vice President
------------------------------ ----------------------------
SIGNATURE PAGE TO THE WARRANT
OF
ChipPAC, Inc.
13
<PAGE>
EXHIBIT 1
NOTICE OF EXERCISE
(To be executed upon exercise of Warrant)
ChipPAC, Inc. WARRANT NO. ___
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
the securities of ChipPAC, Inc., as provided for therein, and (check the
applicable box):
[ ] Tenders herewith payment of the exercise price in full in same-day funds in
the amount of $____________ for _________ such securities.
[ ] Elects the Net Issue Exercise option pursuant to Section 2.2 of the
Warrant, and accordingly requests delivery of a net of ______________ of
such securities, according to the following calculation:
X = Y (A-B) ( ) = (____) [(_____) - (_____)]
------- --------------------------
A (_____)
Where:
X = the number of shares of Warrant Stock to be issued to the Holder;
Y = the number of shares of Warrant Stock purchasable under the amount of
the Warrant being exchanged (as adjusted to the date of such calculation);
A = the Fair Market Value of one share of Common Stock; and
B = Purchase Price (as adjusted to the date of such calculation).
[ ] Elects the Easy Sale Exercise option pursuant to Section 2.3 of the
Warrant, and accordingly requests delivery of a net of ______________ of such
securities.
Please issue a certificate or certificates for such securities in the name of,
and pay any cash for any fractional share to (please print name, address and
social security number):
Name: __________________________
Address: __________________________
Signature: __________________________
Exhibits
<PAGE>
Note: The above signature should correspond exactly with the name on the first
page of this Warrant Certificate or with the name of the assignee appearing in
the assignment form below.
If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher whole number of shares.
Exhibits
<PAGE>
EXHIBIT 2
ASSIGNMENT
(To be executed only upon assignment of Warrant or a portion WARRANT NO. ___
thereof)
For value received, hereby sells, assigns and transfers unto _______________ the
within Warrant or a portion thereof, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint ___________________
attorney, to transfer said Warrant or such portion thereof on the books of the
within-named Company with respect to the number of shares of Warrant Stock set
forth below, with full power of substitution in the premises:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Name(s) of Assignee(s) Address # of Warrant Shares
- ---------------------------------------------------------------------
<S> <C> <C>
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
</TABLE>
And if said number of shares of Warrant Stock shall not be all the shares of
Warrant Stock represented by the Warrant, a new Warrant is to be issued in the
name of said undersigned for the balance remaining of the shares of Warrant
Stock registered by said Warrant.
Dated: _____________________________
Signature: _____________________________
Notice: The signature to the foregoing Assignment must correspond to the name
as written upon the face of this security in every particular, without
alteration or any change whatsoever; signature(s) must be guaranteed by an
eligible guarantor institution (banks, stock brokers, savings and loan
associations and credit unions with membership in an approved signature
guarantee medallion program) pursuant to SEC Rule 17Ad-15.
16
<PAGE>
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This Agreement (the "Agreement") is made and entered into and is effective
as of October 1, 1999, between ChipPAC, Inc., a California corporation (the
"Company") and Dennis McKenna ("Executive"). This Agreement amends, restates and
replaces that certain (i) Employment Agreement, dated as of October 1, 1997, as
the same may have been amended or modified from time to time, by and between the
Company and Executive and (ii) Chief Executive Officer Management Incentive
Agreement, dated as of August 1, 1998, as the same may have been amended or
modified from time to time, by and between the Company and Executive (other than
that certain Mutual Release of Claims attached as Exhibit A thereto).
WHEREAS, Executive is currently employed by the Company as its President
and Chief Executive Officer; and
WHEREAS, the Company desires to continue the services of Executive as
President and Chief Executive Officer of the Company and Executive desires to
perform such services for the Company, on the terms and conditions as set forth
herein.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements set forth below, it is mutually agreed as follows:
1. Effective Date, Term and Duties. The term of employment of Executive
-------------------------------
by the Company hereunder shall commence upon the date hereof (the "Effective
Date") and end on December 31, 2001, and shall continue thereafter on the same
terms and conditions (such term being hereinafter referred to as the "Employment
Period") unless earlier terminated pursuant to Section 4. The Employment Period
shall be extended automatically without further action of either party, on
January 1, 2001, and on each succeeding January 1st, for terms of one year,
unless prior to each such date the Company or the Executive shall notify the
other in writing of its or his intention not to renew this Agreement, in which
case the Agreement shall terminate at the end of the original term or any
extension thereof, unless earlier terminated pursuant to Section 4 (such
extended period being hereinafter referred to as the "Extended Employment
Period").
Executive shall have such duties as the Company may from time to time
prescribe consistent with his position as President and Chief Executive Officer
of the Company (the "Services"). Executive shall report directly to the Board
of Directors of the Company. Executive shall devote his full time, attention,
energies and best efforts to the business of the Company and its subsidiaries.
During the Employment Period and the Extended Employment Period, the Company
shall maintain an office for Executive at its chief executive office.
2. Compensation. The Company shall pay and Executive shall accept as
------------
full consideration for the Services compensation consisting of the following:
<PAGE>
2.1 Base Salary. $400,000 per year base salary ("Base Salary"),
-----------
payable in installments in accordance with the Company's normal payroll
practices, less such deductions or withholdings required by law. Base Salary
shall be reviewed annually by the Board of Directors of the Company (or its
Compensation Committee) to evaluate the performance of Executive and his duties
hereunder.
2.2 Annual Bonus. A target bonus of up to 80% of the Base Salary at
------------
100% performance per year ("Target Annual Bonus"), which shall be payable based
on the attainment by the Company of the Short-Term Bonus Plan Objectives under
the Company's Executive Bonus Plan for each such year, which such Short-Term
Bonus Plan Objectives shall be agreed upon by the Executive and the Board of
Directors of the Company (or its Compensation Committee) annually and shall be
consistent with the Company's business plan for the relevant year.
Notwithstanding the foregoing, Executive's 1999 Target Annual Bonus shall be pro
rated as set forth in Exhibit A attached hereto. The mutually agreed upon bonus
---------
targets for 1999 are detailed in Exhibit A attached hereto. The bonus targets
---------
for 2000 and 2001 listed in Exhibit A are provided as reference points only at
---------
this time and will be subsequently agreed upon as set forth above in this
Section 2.2.
2.3 Stock Based Compensation. On or about the Effective Date of this
------------------------
Agreement, the Company and Executive have entered into a Key Employee Purchased
Stock Agreement, a Tranche I Stock Option Agreement and a Tranche II Stock
Option Agreement (the "Stock Based Incentive Agreements") pursuant to which (i)
the Company will sell, and Executive will purchase, certain shares of the
Company's capital stock and (ii) the Company will grant Executive options to
acquire certain shares of the Company's capital stock.
2.4 Indemnification. In the event Executive is made, or threatened
---------------
to be made, a party to any legal action or proceeding, whether civil or
criminal, by reason of the fact that Executive is or was a director or officer
of the Company or serves or served any other corporation fifty percent (50%) or
more owned or controlled by the Company in any capacity at the Company's
request, Executive shall be indemnified by the Company, and the Company shall
pay Executive's related actual and reasonably incurred expenses, when and as
incurred, all to the fullest extent permitted by law, so long as Executive acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company or any of its subsidiaries, and, with respect
to any criminal action or proceeding, Executive had no reasonable cause to
believe his conduct was unlawful.
3. Benefits. Executive will be eligible to participate in the Company's
--------
employee benefit plans of general application, including, without limitation,
those plans covering medical, disability and life insurance in accordance with
the rules established for individual participation in any such plan and under
applicable law. Executive will be eligible for vacation and sick leave in
accordance with the policies in effect during the term of this Agreement and
will receive such other benefits as the Company generally provides to its other
employees of comparable position and experience. Executive will be provided
with term life insurance in a principal amount that is no less than $5,000,000
payable to Executive's designated beneficiary, to the extent that Executive is
insurable. Executive shall be entitled to continue any medical, disability and
life insurance benefits at his cost
2
<PAGE>
after termination of the Employment Period or the Extended Employment Period,
provided that such cost shall not exceed the cost to the Company of providing
similar benefits to employees of the Company who are in active employment with
the Company.
4. Benefits Upon Termination of Employment Period. Executive's
----------------------------------------------
employment by the Company shall terminate immediately upon Executive's receipt
of written notice by the Company, immediately upon the Company's receipt of
written notice by Executive, or immediately upon Executive's death or Disability
(as defined below). In the event of Executive's termination without Cause (as
defined in Subsection 4.2) or Executive's termination of the Employment Period
or the Extended Employment Period for Good Reason (as defined in Subsection
4.3), the Company shall provide Executive with termination benefits upon
termination of the Employment Period or Extended Employment Period, as follows:
4.1 Termination Benefits. Executive shall be entitled to receive an
--------------------
amount ("Termination Pay") equal to (i) two (2) times Executive's Base Salary as
of the date of Executive's termination and (ii) Executive's bonus described in
Subsection 2.2 above for the year of termination if Executive would have
otherwise been entitled (as determined in good faith by the Board of Directors
of the Company (or its Compensation Committee)) to receive such bonus had he not
been terminated; provided that if the date of such termination occurs prior to
the last day of the calendar year in which such bonus is awarded, then such
bonus shall be prorated based upon the number of days elapsed prior to
Executive's date of termination. Such Termination Pay shall be payable in two
lump sums, the first payment consisting of 50% of the amount payable pursuant to
clause (i) of the preceding sentence plus the amount payable pursuant to clause
(ii) of the preceding sentence (which payment shall be made within 30 days of
the termination date) and the second payment consisting of the balance of the
Termination Pay (which payment shall be made on the first anniversary of the
termination date). Such Termination Pay shall be in lieu of any claims
Executive may have had with respect to termination benefits and, as a condition
to the Company's obligations (if any) to pay the Termination Pay, Executive will
execute and deliver the Company a general release of claims in form and
substance reasonably satisfactory to the Company. Notwithstanding any provision
in this Agreement to the contrary, the Company shall have no obligation to pay
any amounts which would otherwise be payable pursuant to Section 4 or Section 5
hereof during such times as Executive is in material breach of any material
covenant or agreement of this Agreement or the Stock Based Incentive Agreements.
4.2 Circumstances Under Which Termination Benefits Would Not Be Paid.
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The Company shall not be obligated to pay Executive the termination benefits
pursuant to Subsection 4.1 if the Executive's employment is terminated for Cause
or if Executive terminates the Employment Period or the Extended Employment
Period other than for Good Reason. For purposes of this Agreement, "Cause"
shall be limited to (1) Executive's gross misconduct or fraud, in the
performance of his employment; (2) Executive's conviction or guilty plea with
respect to any felony (except for motor vehicle violations); or (3) Executive's
material breach of this Agreement or any of the Stock Based Incentive
Agreements.
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4.3 Constructive Termination. Notwithstanding anything in this
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Section 4 or Section 5 to the contrary, the Employment Period and the Extended
Employment Period will be deemed to have been terminated (a "Constructive
Termination") and Executive will be deemed to have Good Reason for termination
of the Employment Period and the Extended Employment Period ("Good Reason"), if
there should occur:
(A) a material adverse change in Executive's position causing it to
be of materially less responsibility without Executive's written consent,
and such a materially adverse change shall in all events be deemed to occur
if Executive no longer serves as President and Chief Executive Officer
reporting to the Board of Directors, unless Executive consents in writing
to such change;
(B) a reduction, without Executive's written consent, in his level of
Base Salary by more than ten percent (10%) or a reduction by more than ten
percent (10%) in the Target Annual Bonus opportunity as compared to the
Target Annual Bonus opportunity of the prior year; or
(C) a relocation of the Company's chief executive offices from their
current location by more than 50 miles without Executive's consent.
4.4 Termination by Reason of Death or Disability. In the event of
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Executive's death during the Employment Period or the Extended Employment
Period, the Company shall pay to Executive's estate the bonus described in
Subsection 2.2 above for the year of Executive's death if Executive would have
otherwise been entitled (as determined in good faith by the Board of Directors
of the Company (or its Compensation Committee)) to receive such bonus had he not
died; provided that if Executive dies prior to the last day of the calendar year
in which such bonus is awarded, then such bonus shall be prorated based upon the
number of days elapsed prior to Executive's death. In addition, Executive's
estate will receive payment for all Base Salary and all other earned and unpaid
compensation which become payable by reason of Executive's death and any other
benefits which become payable under the Company's then existing benefit plans
and policies in accordance with such plans and policies in effect on the date of
death and in accordance with applicable law. In the event that, during the term
of this Agreement, Executive is unable to perform his job due to Disability (as
defined below), the Company may, at its election, terminate Executive's
employment with the Company and such termination shall be deemed to be a
termination by the Company other than for Cause and Executive shall be entitled
to receive the benefits set forth in Subsection 4.1 hereof. "Disability" (i)
shall mean any physical or mental incapacitation which results in Executive's
inability to perform his duties and responsibilities for the Company for a total
of 120 days during any twelve-month period, as determined by the Board of
Directors of the Company in its good faith judgment and (ii) shall be deemed to
have occurred on the 120th day of such inability to perform.
5. Change in Control. Should there occur a Change in Control (as defined
-----------------
below), then during the period (if any) following a Change in Control that
Executive shall continue to provide the Services, then the terms and provisions
of this Agreement shall continue in full force and effect.
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For purposes of this Section 5, a Change of Control shall be deemed to
occur upon:
(I) the sale, lease, conveyance or other disposition of all or
substantially all of the Company's assets as an entirety or substantially as an
entirety to any person, entity or group of persons acting in concert other than
in the ordinary course of business (it being agreed that for purposes hereof,
"all or substantially all" shall have the meaning accorded to such term in the
Revised Model Business Corporation Act); or
(II) the first date that the Investors collectively cease to own at
least 35% of the aggregate number of shares of common stock of the Company that
they own on the date hereof (as adjusted for stock splits, stock dividends and
recapitalization and for exchanges in connection with a merger, consolidation,
reorganization or sale). "Investors" means Bain Capital Fund VI, L.P., BCIP
Associates II, BCIP Associates II-B, BCIP Associates II-C, BCIP Trust Associates
II, BCIP Trust Associates II-B, PEP Investments Pty., Ltd., Randolph Street
Partners 1998 DIF, LLC, Randolph Street Partners II and SXI Group LLC and any of
their affiliates.
In the event that the severance and other benefits provided to Executive
(i) constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for this
Section 5, such severance and benefits would be subject to the excise tax
imposed by Section 4999 of the Code, then Executive's severance benefits under
this Section 5 shall be payable either:
(a) in full,
(b) as to such lesser amount which would result in no portion of such
severance and other benefits being subject to excise tax under Section 4999 of
the Code,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by Executive on an after-tax basis, of the greatest amount of
severance benefits under Section 5. Unless the Company and Executive otherwise
agree in writing, any determination required under this Section 5 shall be made
in writing by independent public accountants agreed to by the Company and
Executive (the "Accountants"), whose determination shall be conclusive and
binding upon Executive and the Company for all purposes. For purposes of making
the calculations required by this Section 5, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and Executive shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 5. The Company shall
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 5.
6. Dispute Resolution. The Company and Executive agree that any dispute
------------------
regarding the interpretation or enforcement of this Agreement shall be decided
by confidential, final and binding arbitration conducted by Judicial Arbitration
and Mediation Services ("JAMS") under the
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then-existing JAMS rules, rather than by litigation in court, trial by jury,
administrative proceeding, or in any other forum.
7. Cooperation with the Company After Termination of the Employment
----------------------------------------------------------------
Period. Following termination of the Employment Period or the Extended
- ------
Employment Period for any reason, Executive shall fully cooperate with the
Company in all matters relating to the winding up of his pending work on behalf
of the Company and the orderly transfer of any such pending work to other
employees of the Company or other persons as may be designated by the Company.
8. Confidentiality; Return of Property. Executive agrees to continue
-----------------------------------
to abide by the terms and conditions of any confidentiality and/or proprietary
rights agreement previously entered into by the Executive, on the one hand, and
the Company or any of its affiliates, on the other hand.
9. General.
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9.1 Waiver. Neither party shall, by mere lapse of time, without
------
giving notice or taking other action hereunder, be deemed to have waived any
breach by the other party of any of the provisions of this Agreement. Further,
the waiver by either party of a particular breach of this Agreement by the other
shall neither be construed as, nor constitute a, continuing waiver of such
breach or of other breaches by the same or any other provision of this
Agreement.
9.2 Severability. If for any reason a court of competent
------------
jurisdiction or arbitrator finds any provision of this Agreement to be
unenforceable, the provision shall be deemed amended as necessary to conform to
applicable laws or regulations, or if it cannot be so amended without materially
altering the intention of the parties, the remainder of the Agreement shall
continue in full force and effect as if the offending provision were not
contained herein.
9.3 Notices. All notices and other communications required or
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permitted to be given under this Agreement shall be in writing and shall be
considered effective upon personal service or upon depositing such notice in the
U.S. Mail, postage prepaid, return receipt requested and addressed to Executive
at his most recent address shown on the Company's corporate records, or at any
other address which he may specify in any appropriate notice to the Company and
to the Company, c/o Bain Capital, Inc., One Embarcadero Place, San Francisco, CA
94111, Attention: David Dominik or to such other address as may be specified by
the Board of Directors of the Company.
9.4 Counterparts. This Agreement may be executed in any number of
------------
counterparts (any one or more of which may be executed by facsimile delivery),
each of which shall be deemed an original and all of which taken together
constitutes one and the same instrument and in making proof hereof it shall not
be necessary to produce or account for more than one such counterpart.
9.5 Entire Agreement. The parties hereto acknowledge that each has
----------------
read this Agreement, understands it, and agrees to be bound by its terms. The
parties further agree that this
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Agreement constitutes the complete and exclusive statement of the agreement
between the parties and supersedes all proposals (oral or written),
understandings, representations, conditions, covenants, and all other
communications between the parties relating to the subject matter hereof. The
parties further agree that this Agreement supersedes the prior agreements
referred to in the recitals to this Agreement except as provided in said
recitals.
9.6 Governing Law. This Agreement shall be governed by the law
-------------
of the State of California.
9.7 Assignment and Successors. The Company shall have the right to
-------------------------
assign its rights and obligations under this Agreement. Executive may not
assign any of his rights or delegate any of his duties hereunder without the
prior written consent of the Board of Directors of the Company. The rights and
obligations of each party under this Agreement shall inure to the benefit and
shall be binding upon the successors and permitted assigns of each such party.
9.8 Amendment. The provisions of this Agreement may be amended or
---------
waived only with the prior written consent of the Board of Directors of the
Company and Executive, and no course of conduct or failure or delay in enforcing
the provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
CHIPPAC, INC. EXECUTIVE
By: /s/ Tony Lin /s/ Dennis McKenna
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Name: Tony Lin
--------------------------------
Title: Chief Financial Officer
--------------------------------
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