-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F2HrHnjmURQLb2e1vCjK01cDPrn/8N2Rp/DoOfdbPQr2OM+SnwwBCGfk48fI1EN6 MbVGG/5Vqj9fJGnmtJsVjg== 0001012870-01-502897.txt : 20020411 0001012870-01-502897.hdr.sgml : 20020411 ACCESSION NUMBER: 0001012870-01-502897 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20011119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHIPPAC INC CENTRAL INDEX KEY: 0001093779 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 770463048 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-73674 FILM NUMBER: 1795563 BUSINESS ADDRESS: STREET 1: 3151 CORONADO DR CITY: SANTA CLARA STATE: CA ZIP: 95054 BUSINESS PHONE: 4084865900 MAIL ADDRESS: STREET 1: 3151 CORONADO DRIVE CITY: SANTA CLARA STATE: CA ZIP: 95054 S-3 1 ds3.txt FORM S-3 As filed with the Securities and Exchange Commission on November 19, 2001 Registration No. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------- ChipPAC, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 77-0463048 (State or Other Jurisdiction of Incorporation or (I.R.S. Employer Organization) Identification Number) 47400 Kato Road, Fremont, California 94538 (510) 979-8000 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Dennis P. McKenna President & Chief Executive Officer ChipPAC, Inc. 47400 Kato Road, Fremont, California 94538 (510) 979-8000 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copy to: Eva Herbst Davis, Esq. Kirkland & Ellis 777 South Figueroa Street Los Angeles, California 90017 (213) 680-8400 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this registration statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] 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(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] ----------------- CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum Amount to Offering Price Per Aggregate Offering Amount of Title of Each Class of Securities to Be Registered Be Registered Unit Price Registration Fee - ------------------------------------------------------------------------------------------------------------------------------ 8% Convertible Subordinated Notes due 2011................................... $50,000,000 100% $50,000,000 $12,500 - ------------------------------------------------------------------------------------------------------------------------------ Class A common stock, $0.01 par value, underlying the Notes....................... 5,020,081 shares(1) N/A N/A (2) - ------------------------------------------------------------------------------------------------------------------------------ Class A common stock, $0.01 par value....... 2,192,982 shares(3) $5.81(4) $12,741,225(4) $3,186 - ------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- (Footnotes on next page) ----------------- 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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (1)Such number represents the number of shares of Class A common stock currently issuable upon conversion of the 8% Convertible Subordinated Notes due 2011. Pursuant to Rule 416(a) under the Securities Act of 1933, as amended, we are also registering an indeterminate number of shares of Class A common stock as may be issued from time to time upon the conversion of the notes as a result of the antidilution provisions of the notes. (2)Pursuant to Rule 457(i) of the Securities Act of 1933, as amended, no registration fee is required with respect to the Class A common stock issuable upon conversion of the notes because such shares will be issued for no additional consideration. (3)In the event of a stock split, stock dividend or similar transaction involving the Class A common stock, in order to prevent dilution, the number of shares registered shall be automatically increased to cover additional shares in accordance with Rule 416(a) under the Securities Act of 1933, as amended. (4)Estimated solely for the purpose of calculating the separate registration fee payable with respect to the registration of these shares of Class A common stock, pursuant to Rule 457(c), based upon the average of the high and low prices of the Class A common stock on November 15, 2001, as reported on the Nasdaq National Market. The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion dated November 19, 2001. [LOGO] ChipPac Logo ChipPAC, Inc. $50,000,000 8% Convertible Subordinated Notes Due 2011, the Class A Common Stock Issuable Upon Conversion of the Notes and 2,192,982 Shares of Class A Common Stock This prospectus relates to: . $50,000,000 aggregate principal amount of our 8% convertible subordinated notes due 2011, . 5,020,081 shares of our Class A common stock issuable upon conversion of the notes and . an additional 2,192,982 shares of our Class A common stock. We issued the notes in a private placement on June 22, 2001. The additional 2,192,982 shares of our Class A common stock were originally issued in a private placement on July 13, 2000. This prospectus will be used by the selling security holders to resell their notes, the Class A common stock issuable upon conversion of the notes and the additional Class A common stock. We will not receive any proceeds from the sale of these securities although we have paid the expenses of preparing this prospectus and the related registration statement. We will pay interest on the notes on each June 15 and December 15, beginning December 15, 2001. The notes will mature on June 15, 2011 unless they are converted or redeemed prior to that date. The notes are convertible, at the option of the holder, at any time on or prior to maturity into shares of our Class A common stock. The notes are convertible at a conversion price of $9.96 per share which is equal to 100.4016 shares of our Class A common stock per $1,000 principal amount of notes, subject to adjustment in some circumstances. Prior to June 15, 2004, we may redeem any portion of the notes at a redemption price of $1,000 per $1,000 principal amount of notes, plus accrued and unpaid interest to the redemption date if (1) the closing price of our Class A common stock has exceeded the conversion price by 150% for at least 20 trading days in any consecutive 30 trading day period ending on the trading day prior to the mailing of the notice of redemption and (2) the shelf registration statement covering resales of the notes and the Class A common stock issuable on conversion of the notes is effective and expected to remain effective and available for use for the 30 days following the provisional redemption date, unless registration is no longer required. On or after June 15, 2004, we may redeem the notes at the redemption prices stated in this prospectus, together with the accrued and unpaid interest to the date of the redemption. If we experience a change in control, we must offer to repurchase the notes at 100% of the principal amount, together with accrued and unpaid interest to, but excluding, the date of repurchase. The notes are not entitled to any mandatory redemption or sinking fund. Holders may require us to repurchase their notes upon a change in control. Our Class A common stock is listed on The Nasdaq Stock Market's National Market under the symbol "CHPC." On November 15, 2001, the last reported sale price of our Class A common stock on the Nasdaq National Market was $5.81 per share. Investing in the notes and our Class A common stock involves risks. See "Risk Factors" beginning on page 4. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2001. TABLE OF CONTENTS
Page ---- ABOUT THIS PROSPECTUS.............. 1 WHERE YOU CAN FIND MORE INFORMATION 1 INCORPORATION BY REFERENCE......... 2 FORWARD-LOOKING STATEMENTS......... 3 OUR COMPANY........................ 3 RECENT DEVELOPMENTS................ 3 RISK FACTORS....................... 4 RATIO OF EARNINGS TO FIXED CHARGES. 16 USE OF PROCEEDS.................... 16 SELLING SECURITY HOLDERS........... 16 PLAN OF DISTRIBUTION............... 18 DESCRIPTION OF NOTES............... 20 DESCRIPTION OF CAPITAL STOCK....... 37 LEGAL MATTERS...................... 40 EXPERTS............................ 40
i ABOUT THIS PROSPECTUS This prospectus is a part of the registration statement that we filed with the Securities and Exchange Commission, or SEC. The selling security holders named in this prospectus may from time to time sell the securities described in this prospectus. You should read this prospectus together with additional information described below under the next headings "Where You Can Find More Information" and "Incorporation by Reference." You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer of sale is not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the securities. In this prospectus, the "company," "ChipPAC," "we," "us" and "our" refer to ChipPAC, Inc. Our principal executive offices are located at 47400 Kato Road, Fremont, California, 94538, and our telephone number is (510) 979-8000. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and current reports, proxy statements and other information with the SEC. You can inspect, read and copy these reports, proxy statements and other information at the public reference facilities maintained by the SEC at: . Room 1024, 450 Fifth Street N.W., Judiciary Plaza, Washington, D.C. 20549; and . Suite 1400, 500 West Madison Street, Chicago, Illinois 60661-2511. You can also obtain copies of these materials from the public reference facilities of the SEC at prescribed rates. You can obtain information on the operation of the public reference facilities by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site (http://www.sec.gov) that makes available reports, proxy statements and other information regarding issuers that file electronically with it. 1 INCORPORATION BY REFERENCE The SEC allows us to "incorporate by reference" into this prospectus the information we filed with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information in documents that we file later with the SEC will automatically update and supersede information in this prospectus. We incorporate by reference the documents listed below into this prospectus, and any future filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, until our offering is complete. The documents we incorporate by reference are: . Our Annual Report on Form 10-K for the year ended December 31, 2000 filed on April 2, 2001. . Our Proxy Statements on Form 14A filed with the SEC on February 22, 2001 and April 30, 2001. . Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 filed on May 15, 2001. . Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 filed on August 14, 2001. . Our Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 filed on November 14, 2001. You may request a copy of these filings at no cost, by writing or telephoning us at the following address: ChipPAC, Inc. 47400 Kato Road Fremont, California 94538 Attention: Corporate Secretary Telephone: (510) 979-8000 2 FORWARD-LOOKING STATEMENTS This prospectus, including the section entitled "Risk Factors," contains forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Such risks and other factors include, among other things, those listed under "Risk Factors" and elsewhere in this prospectus. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks outlined under "Risk Factors." These factors may cause our actual results to differ materially from any forward-looking statement. OUR COMPANY ChipPAC is one of the world's largest providers of semiconductor packaging, test and distribution test services. We offer a full portfolio of leaded integrated circuit, or "IC," laminate and power packaging to leading semiconductor companies that service the computing, communications and multi-application end markets. We are a leader in providing high end packaging solutions, including ball grid array packages, or "BGA," packages, the most advanced type of mass produced package. We are the largest semiconductor packaging and test service provider in mainland China. As consumers demand smaller form factors with more functionality, there is a greater requirement for power regulation and generation, which should drive demand for our power devices. We also provide advanced packaging products that address the needs of semiconductors used in wireless communications applications, including flip-chip, chip-scale and stacked die technologies. Outsourcing of packaging and test services to independent packagers like ChipPAC continues to expand due to several factors, including time-to-market pressures, cost reduction, resource allocation, equipment utilization, the increased technological complexity of packaging, and the growth of "fabless" semiconductor manufacturers. Historically, outsourced semiconductor manufacturing services have grown faster than the semiconductor market. According to Electronic Trend Publications, outsourcing for high-end package solutions such as BGA and chip-scale packages or "CSP," is forecasted to grow at a compounded annual rate of 38.8% from 2000 to 2005. Our headquarters are located in the Fremont, California and our manufacturing facilities are strategically located in South Korea, China and Malaysia to address the needs of our customers. We also have design centers in Arizona and Korea to provide 24-hour support to our customers. RECENT DEVELOPMENTS The weakness in demand expected in 2001 for packaging and test services has and is expected to continue to adversely affect our cash flow from operations. We believe that our existing cash balances, cash flows from operations, available equipment lease financing, available borrowings under our senior credit facilities and the net proceeds from our completed initial public offering, concurrent private placement of stock and subsequent private placement of notes will be sufficient to meet our projected capital expenditures, working capital and other cash requirements for the next twelve months. In addition, at present, our customers have much lower than normal visibility into the future. According to current projections, we might violate certain covenants in the fourth quarter of 2001. We are in discussions with the banks to obtain a waiver, if necessary. An event of default under any debt instrument, if not cured or waived, could have a material adverse effect on us. We may require capital sooner than currently expected. We cannot assure you that additional financing will be available when we need it or, if available, that it will be available on satisfactory terms. In addition, the terms of our secured bank facility, senior notes and senior subordinated notes significantly reduce our ability to incur additional debt. Failure to obtain any such required additional financing could have a material adverse effect on our company. 3 RISK FACTORS You should carefully consider the following factors in addition to the other information set forth in this document in analyzing an investment in ChipPAC. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties that we do not presently know about or that we currently believe are immaterial may also impact our business operations. If any of the following risks actually occur, our business, financial condition or results of operations will likely suffer. In that case, the trading price of our publicly traded stock or notes could fall, and you may lose all or part of the money you invested. Risks Relating to the Notes Our substantial indebtedness could adversely affect our financial health, make us vulnerable to adverse economic and industry conditions and prevent us from fulfilling our obligations under the notes. Our substantial indebtedness could have important consequences to you. For example, it could: . make it more difficult for us to satisfy our obligations relating to the notes; . increase our vulnerability to general adverse economic and industry conditions by limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; . require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thus reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts and other general corporate purposes; . place us at a competitive disadvantage relative to our competitors that have less debt; and . limit, along with the financial and other restrictive covenants in our indebtedness, our ability to borrow additional funds. Furthermore, failing to comply with those covenants could result in an event of default which, if not cured or waived, could have a material adverse effect on our ability to increase our revenues and profitability and meet our growth objectives. Despite our current levels of indebtedness, we still may be able to incur substantially more debt which could increase the risks created by our substantial indebtedness. We may be able to incur substantial additional indebtedness in the future. For example, we have the ability to increase our revolving line of credit by $25.0 million without further consent from our existing lenders. Our senior credit facility permits us to borrow up to $20.0 million for a capital expenditure line and for revolving loans up to $50.0 million, including letters of credit. All of these borrowings will be secured by all of our assets and those of our subsidiaries, except those of our Chinese operating subsidiary. The addition of new debt to our current debt levels could intensify the debt-related risks that we now face that are described above. Your right to receive payments on the notes is junior to the company's existing and, possibly future, senior indebtedness. It is possible, therefore, that you may receive no compensation of any kind relating to the notes if there is a bankruptcy, liquidation or similar proceeding affecting us. We may not have sufficient funds to satisfy our obligations relating to the notes. The notes rank behind all of our existing indebtedness, including our guarantees of our subsidiary's obligations under the senior credit facility and our subsidiary's existing 123/4% senior subordinated notes. The notes will also rank behind all of our future borrowings, except any future indebtedness that expressly provides that it ranks with, or subordinated in right of payment to, the notes. As a result, upon any distribution to our creditors, in a bankruptcy, liquidation or reorganization or similar proceeding relating to us or our property, we will have to pay the holders of debt senior to the notes in full before we can make any payment on the notes. Moreover, the notes will be structurally subordinated to all liabilities, including trade payables, of our subsidiaries and any subsidiaries upon their 4 liquidation or reorganization, and the rights of the holders of the notes to share in those assets, would be subordinate to the claims of the subsidiaries' creditors. In addition, all payments on the notes will be blocked in the event of a payment default on our senior debt, including borrowings under the senior credit facility, and may be blocked for specified periods in the event of non-payment defaults on certain senior debt. As a holder of debt securities, you would typically have equal rights to your ratable share, along with all of our suppliers and vendors to which we owe money, who are commonly referred to as trade creditors, and other holders of debt of the same class as the notes, of any assets remaining after we have paid off all of the debt senior to the notes. However, the indenture requires that amounts otherwise payable to holders of the notes in a bankruptcy, liquidation or similar proceeding be paid to holders of debt senior to the notes instead. Consequently, holders of the notes may receive less, ratably, than holders of trade payables or other debt of the same class in this type of proceeding. We are a holding company and conduct all of our operations through our subsidiaries, which may affect our ability to make payments on the notes. All of our manufacturing services are conducted through our subsidiaries. As a result, our cash flow and our ability to service our debt, including the notes, depend upon the earnings of our subsidiaries. In addition, we depend on the distribution of earnings, loans or other payments by our subsidiaries to us. Our subsidiaries are separate and distinct legal entities. Our subsidiaries have no obligation to pay any amounts due on the notes. Our subsidiaries are not required to provide us with funds for our payment obligations, whether by dividends, distributions, loans or other payments. In addition, any payment of dividends, distributions, loans or advances by our subsidiaries to us could be subject to statutory or contractual restrictions. Payments to us by our subsidiaries will also be contingent upon our subsidiaries' earnings and business considerations. The senior revolving credit facility and the indenture governing our existing 123/4% senior subordinated notes impose limitations on how we conduct our business; as a result, we may not be able to pursue strategies that could be in the best interests of holders of the notes and stock. The senior revolving credit facility and the indenture governing our existing 123/4% senior subordinated notes contain restrictions on us that could increase our vulnerability to general adverse economic and industry conditions by limiting our flexibility in planning for and reacting to changes in our business and industry. Specifically, these restrictions limit our ability to . incur additional debt; . pay dividends and make other distributions; . prepay subordinated debt; . make investments and other restricted payments; . enter into sale and leaseback transactions; . create liens; . sell assets; . enter into transactions with affiliates; and . consolidate or merge. 5 As a result of these restrictions, we may not be able to pursue business strategies that could be in the best interests of holders of our notes and stock. If we fail to comply with the restrictions in the senior credit facility, the indenture governing our existing 123/4% senior subordinated notes, the indenture governing these notes or any other subsequent financing agreements, a default may occur. This default may allow some creditors, if their respective agreements so provide, to accelerate payments owed on such debt as well as any other indebtedness as to which a cross-acceleration or cross-default provision applies. In addition, our lenders may be able to terminate any commitments they had made to supply us with further funds. See "Description of Notes." We may not have the ability to raise the funds necessary to finance the change in control offer required by the indenture governing the notes. If the company undergoes a change in control (as defined in the indenture governing the notes) we may need to refinance large amounts of our debt, including our existing 123/4% senior subordinated notes and these notes and borrowings under the senior revolving credit facility. If a change in control occurs, we must offer to buy back the notes for a price equal to 100.0% of the principal amount of the notes, plus any accrued and unpaid interest. We cannot assure you that there will be sufficient funds available for us to make any required repurchases of the notes upon a change in control. In addition, our senior revolving credit facility will prohibit us from repurchasing the notes until we first repay the senior revolving credit facility in full and the indenture governing our existing 123/4% senior subordinated notes requires us to meet financial tests before preparing subordinated debt like the notes. If we fail to repurchase the notes in that circumstance, we will go into default under the indenture governing the notes and by virtue of the cross-default provisions contained in the notes, the senior revolving credit facility and the indenture governing our existing 123/4% senior subordinated notes. A change in control for purposes of the indenture governing the notes may also constitute a change in control under the indenture governing our existing 123/4% senior subordinated notes, which would require that we offer to buy back the existing 123/4% senior subordinated notes prior to these notes. Any future debt which we incur may also contain restrictions on repayment upon a change in control. If any change in control occurs, we cannot assure you that we will have sufficient funds to satisfy all of the company's debt obligations. These buyback requirements may also delay or make it harder for others to effect a change in control. However, certain other corporate events, such as leveraged recapitalizations that would increase our level of indebtedness, would not constitute a change in control under the indenture governing the notes. See "Description of Notes--Purchase of Notes at Your Option Upon a Change in Control." Federal and state laws allow courts, under specific circumstances, to void debts and require holders of debt securities to return payments received from debtors. A significant portion of the net proceeds from the initial private placement of these notes was used to repay our existing senior credit facility. If a bankruptcy proceeding or a lawsuit is initiated by the company's unpaid creditors, the debt which we incurred to repay our existing credit facility, including the notes, may be reviewed under federal bankruptcy laws and comparable provisions of state fraudulent transfer laws. Under these laws, the debt of the company could be voided, or claims in respect of the debt could be subordinated to all other debt if, among other things, the company: . received less than reasonably equivalent value or fair consideration for the incurrence of such debt; . was insolvent or rendered insolvent by reason of such incurrence; . was engaged in a business or transaction for which the remaining assets of the company constituted unreasonably small capital; or . intended to incur, or believed that the company would incur, debts beyond our ability to pay such debts as they mature. 6 In addition, you may be required to return to fund for the benefit of creditors, any payments received from us in respect of the notes. The measures of insolvency will vary depending upon the fraudulent transfer law applied in any proceeding to determine whether such a transfer has occurred. Generally, however, a debtor would be considered insolvent if: . the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets; . the present fair saleable value of its assets were less than the amount that would be required to pay its probable liability on existing debts, including contingent liabilities, as they become absolute and mature; or . it could not pay its debts as they become due. On the basis of historical financial information, recent operating history and other factors, we believe that we are not insolvent, do not have unreasonably small capital for the business in which we are engaged and have not incurred debts beyond our ability to pay such obligations as they mature. We cannot assure you, however, as to what standard a court would apply in making such determination, or that a court would agree with our conclusion in this regard. We cannot assure you that an active trading market will develop or continue for the notes. Prior to the initial private placement of these notes, there has been no public market for the notes. In addition, both the liquidity and the market price quoted for these notes may be adversely affected by changes in the price of our Class A common stock, changes in the overall market for convertible securities and by changes in our financial performance or prospects, or in the prospects for companies in our industry generally. As a result, we cannot assure you that an active or stable trading market will develop or continue for these notes. We also cannot guarantee that the notes will trade in the same or like manner as our existing 123/4% senior subordinated notes. Risks Relating to Our Class A Common Stock Our stock price has fluctuated significantly in the past, and the market price of the notes and our Class A common stock may be lower than you expect. Since our initial public offering on August 8, 2000, the closing price of our Class A common stock has fluctuated significantly, ranging from a low of $1.88 to a high of $18.50 per share. Fluctuations in our stock price could continue. Among the factors that could affect our stock price are: . quarterly variations in our operating results; . strategic actions by us or our competitors, such as acquisitions; . general market conditions; and . general economic factors unrelated to our performance. The stock markets in general, and the markets for technology companies in particular, have experienced a high degree of volatility not necessarily related to the operating performance of particular companies. We cannot provide assurances as to our stock price or as to the negative effect a change in the price of our Class A common stock may have on the market price of the notes. 7 Some of our long-time stockholders have the right to require us to register the public sale of their shares; all of our total outstanding shares of Class A common stock may be sold into the market; future sales of those shares could depress the market price of our Class A common stock. The public market for our Class A common stock includes 11,500,000 shares of Class A common stock that we sold in our initial public offering. At the time of our initial public offering, there were 55,631,718 additional shares of our Class A common stock outstanding. Those people and entities who were our stockholders prior to our initial public offering are able to sell their shares in the public market, subject to legal restrictions on transfer. Some of our stockholders prior to our initial public offering are parties to agreements with us that provide for demand registration rights to cause us to register under the Securities Act of 1933, as amended, or the Securities Act, all or part of their shares of our Class A common stock, as well as piggyback registration rights. Registration of the sale of these shares of our Class A common stock would permit their sale into the market immediately. If our stockholders prior to our initial public offering sell a large number of shares, the market price of our Class A common stock could decline, as these sales may be viewed by the public as an indication of an upcoming or recently occurring shortfall in the financial performance of our company. Moreover, the perception in the public market that these stockholders might sell shares of our Class A common stock could depress the market price of the Class A common stock. Provisions of our charter documents could discourage potential acquisition proposals and could delay, deter or prevent a change in control. Provisions of our certificate of incorporation and by-laws may inhibit changes in control of our company not approved by our board of directors and would limit the circumstances in which a premium may be paid for our Class A common stock in proposed transactions, or a proxy contest for control of the board may be initiated. These provisions provide for: . a prohibition on stockholder action through written consents; . a requirement that special meetings of stockholders be called only by our chief executive officer or the board of directors; . advance notice requirements for stockholder proposals and nominations; . limitations on the ability of stockholders to amend, alter or repeal the by-laws; and . the authority of the board to issue, without stockholder approval, preferred stock with terms as the board may determine. Risks Related to Our Business Our operating results for the quarters ended September 30, 2001, June 30, 2001 and March 31, 2001 declined significantly from the quarters ended September 30, 2000, June 30, 2000 and March 31, 2000. Our net and operating incomes for the quarters ended September 30, 2001, June 30, 2001 and March 31, 2001 decreased as compared to our results in the quarters ended September 30, 2000, June 30, 2000 and March 31, 2000 as a result of a decline in our revenues. Our revenues for the quarters ended September 30, 2001, June 30, 2001 and March 31, 2001 were $74.7 million, $87.4 million and $89.9 million, respectively, compared to $155.8 million, $109.0 million and $97.5 million, respectively, in the same periods for 2000. The decline is attributable to the continued semiconductor industry demand slowdown and resulting inventory buildup caused by ongoing end market demand weakness. The decline is attributable to the continued semiconductor industry demand slowdown and resulting inventory buildup caused by ongoing end market demand weakness. We cannot assure you that our business will not continue to decline or that our performance will improve. 8 We may not be able to continue to implement our cost saving strategy. If we are able to continue following it, it may not reduce our operating expenses by as much as we anticipated and could even compromise the development of our business. In response to the recent weakness in demand for semiconductors, we implemented cost saving measures, including significant reduction in our work force, furloughs, reduced work shift schedules, reductions in discretionary spending, reduced materials cost and lower capital expenditures and redesign of our manufacturing processes to improve productivity. As a result of these cost saving measures, we have incurred approximately $3.0 million in restructuring charges during the nine months ended September 30, 2001. However, we cannot assure you that these cost saving measures will increase productivity nor that the expected net savings will occur during this period or at any other time in the expected amounts, if at all. In fact, our cost saving measures could adversely affect our revenue, as it could create inefficiencies in our business operations, result in labor disruptions and limit our ability to expand and grow our business. The cyclicality of the semiconductor industry could adversely affect our operating results. Our operations are substantially affected by market conditions in the semiconductor industry, which is highly cyclical and, at various times, has experienced significant economic downturns characterized by reduced product demand and production overcapacity which can result in rapid erosion of average selling prices. At the end of 2000, we experienced a general slowdown in the semiconductor industry. In addition, we increase our level of operating expenses and investment in packaging services capacity based on customer demand forecast(s) and anticipated revenue growth. If our revenues do not grow as anticipated or the forecasts upon which we rely are inaccurate, and we are unable to decrease these expenses, our operating income would decrease. Our profitability is affected by average selling prices which tend to decline. Decreases in the average selling prices of our packaging and test services can have a material adverse effect on our profitability. The average selling prices of packaging and test services have declined historically, with packaging services in particular experiencing severe pricing pressure. This pricing pressure for packaging and test services is likely to continue. Our ability to maintain or increase our profitability will continue to be dependent, in large part, upon our ability to offset decreases in average selling prices by improving production efficiency, increasing unit volumes packaged or tested, or by shifting to higher margin packaging and test services. If we are unable to do so, our business, financial condition and results of operations could be materially and adversely affected. If we are unable to develop and market new technologies, we may not remain competitive within the semiconductor packaging industry. The semiconductor packaging and test industry is characterized by rapid increases in the diversity and complexity of packaging services. As a result, we expect that we will need to continually introduce more advanced package designs in order to respond to competitive industry conditions and customer requirements. The requirement to develop, license and maintain advanced packaging capabilities and equipment could require significant research and development and capital expenditures in future years. Any failure by us to achieve advances in package design or to obtain access to advanced package designs developed by others could reduce our growth prospects and operating income. 9 The intensity of competition in our industry could result in the loss of our customers, which could adversely affect our revenues and profits. We face substantial competition from a number of established independent packaging companies and with the internal capabilities of many of our largest customers. Each of our primary competitors has significant operational capacity, financial resources, research and development operations, and established relationships with many large semiconductor companies, which are current or potential customers of ours. Furthermore, our competitors may in the future capture our existing or potential customers through superior responsiveness, service quality, product design, technical competence or other factors, which we view as principal elements of competition in our industry. In addition, our primary customers may, in the future, shift more of their packaging and test service demand internally. As a result, we may have reduced revenues and profits. Our research and development efforts may not yield profitable and commercially viable services; thus, we may have significant short-term research and development expenses, which will not necessarily result in increases in revenue. Our research and development efforts may not yield commercially viable packages or test services. The qualification process for new customers is conducted in various stages which may take one or more years to complete, and during each stage there is a substantial risk that we will have to abandon a potential package or test service which is no longer marketable and in which we have invested significant resources. In the event we are able to qualify new packages, a significant amount of time will have elapsed between our investment in new packages and the receipt of any related revenues. We could lose customers, and thus revenue, if we cannot maintain the quality of our services. The semiconductor packaging process is complex and involves a number of precise steps. Defective packaging can result from a number of factors, including the level of contaminants in the operational environment, human error, equipment malfunction, use of defective materials and plating services and inadequate sample testing. From time to time, we expect to experience lower than anticipated yields as a result of these factors, particularly in connection with any expansion of capacity or change in processing steps. In addition, our yield on new packaging could be lower during the period necessary for us to develop the requisite expertise and experience with these processes. Any failure by us to maintain high quality standards or acceptable yields, if significant and sustained, could result in the loss of customers, delays in shipments, increased costs and cancellation of orders. Our business may be adversely affected by the loss of, or reduced purchases by, Intel Corporation, Atmel Corporation, LSI Logic Corporation, Intersil Corporation, NVIDIA Corporation or any other large customer. Additionally, we may encounter difficulties in soliciting new customers. As of October 31, 2001, sales to our top five customers in the aggregate accounted for approximately 71.0% of total net revenues. If any of our main customers were to purchase significantly less of our services in the future, these decreased levels of purchases could, ultimately, harm our operating results. Semiconductor packaging companies must pass a lengthy and rigorous qualification process that can take up to six months at a cost to the customer of approximately $250,000 to $300,000. If we fail to qualify packages with potential customers or customers with which we have recently become qualified do not use our services, then our customer base could become more concentrated with a limited number of customers accounting for a significant portion of our revenues. Moreover, we believe that once a semiconductor company has selected a particular packaging and test foundry company's services, the semiconductor company generally relies on that vendor's packages for specific applications and, to the extent possible, subsequent generations of that vendor's packages. Accordingly, it may be difficult to achieve significant sales to a particular or potential customer once it selects another vendor's packaging services. 10 Economic crisis in Asia where most of our suppliers are located could prevent us from securing adequate supplies of materials, which could, in turn, prevent us from meeting the requirements of our customers and result in a decrease in our revenues. Most of our materials suppliers are located in Asia. Historically, over half of our substrate costs were incurred from the purchase of materials from Japanese suppliers. In the future, we expect that a growing portion of these materials will be supplied by sources in Korea and Taiwan. Several countries in this region have experienced currency devaluation and/or difficulties in financing short-term obligations. We cannot assure you that the effect of an economic crisis on our suppliers will not impact operations, or that the effect on our customers in that region will not adversely affect both the demand for our services and the collectibility of receivables. The failure of our vendors to supply sufficient quantities of materials on a timely basis could prevent us from fulfilling our customers' orders. In addition, we may not be able to pass on any unexpected increase in the cost of these materials to our customers. We obtain materials to fill orders for our packaging and test services directly from vendors. To maintain competitive packaging operations, we must obtain from our vendors, in a timely manner, sufficient quantities of acceptable materials at expected prices. We source most of our materials, including critical materials like laminate substrates, lead frames, mold compounds and gold wires, from a limited group of suppliers. We purchase all of our materials on a purchase order basis and have no long-term contracts with any suppliers. From time to time, vendors have extended lead times or limited the supply of required materials to us because of vendor capacity constraints and, consequently, we have experienced difficulty in obtaining acceptable materials on a timely basis. Our business and results could be negatively impacted if our ability to obtain sufficient quantities of materials and other supplies in a timely manner were substantially diminished or if there were significant increases in the cost of materials that we could not pass on to our customers. If we are unable to obtain capital equipment in a timely manner, we may be unable to meet the increased demands of our customers which could result in a decrease in our revenues. Our facilities currently have sufficient packaging and test services capacity to meet the current and expected demands of our customers. Nonetheless, in the event there are significant increases in overall semiconductor demand or demand for some of our products and services, we may not be able to meet those increased demands of our customers. Moreover, because the semiconductor packaging and test services business requires investment in expensive capital equipment and is characterized, from time to time, by intense demand, limited supply and long delivery cycles, we may not be able to readily increase our operating capacity. This would lead to a loss of sales of our packaging and test services, could ultimately lead to a loss in market share and have a negative impact on our results of operations. We depend upon intellectual property and license critical technology from Hynix Semiconductor, Inc., Motorola, Inc., Tessera, Inc., LSI Logic and Intersil. To the extent these licenses are not perpetual and irrevocable, our net revenues could be materially adversely affected if our rights under these licenses expire or are terminated. We seek to protect our proprietary information and know-how through the use of trade secrets, confidentiality agreements and other security measures. We may not obtain patent protection for the patent applications that we file, or if we are granted patents, those patents may not offer meaningful protection. Additionally, we cannot assure you that our competitors will not develop, patent or gain access to similar know-how and technology, or reverse engineer our packaging services, or that any confidentiality agreements upon which we rely to protect our trade secrets and other proprietary information will be adequate to protect our proprietary technology. 11 Any patents and utility model, design right and computer program right registrations obtained relating to technology that we developed prior to our recapitalization are owned by Hynix Semiconductor, formerly Hyundai Electronics Inc. In connection with our recapitalization, we entered into a patent and technology license agreement by which Hynix Semiconductor granted us license to use specific intellectual property rights in our semiconductor packaging and test activities. We expect to seek patents and utility model, design right and computer program right registrations, as applicable, on new packaging process and package design technologies that we develop as a means of protecting technology and market position. We have a non-exclusive sublicense from Hynix Semiconductor to use patented BGA technologies owned by Motorola, which expires on December 31, 2002. Motorola licenses these patents to others, including our competitors. After giving pro forma effect to the acquisition of the Malaysian business in 2000, these BGA technologies contributed 41.1% of our net revenues in 2000. We have a worldwide, royalty-bearing, non-exclusive license under specified Tessera patents, technical information and trademarks relating to Tessera's proprietary IC packages. This license will expire sometime after February 2018. We also have two separate license agreements with LSI Logic under which we have worldwide, royalty-bearing, non-exclusive licenses to use LSI packaging technology and technical information to manufacture, use and sell flip-chip semiconductor devices having at least 200 solder balls and semiconductor device assemblies having an overall height of less than 1.2 millimeters, respectively. The LSI Logic license relating to flip-chip semiconductor devices becomes perpetual and irrevocable upon our payment of fees or January 1, 2004, whichever occurs first. The other LSI Logic license is perpetual but may be terminated by LSI Logic in the event of our uncured breach or bankruptcy. In addition, we have a worldwide, royalty-free, non-exclusive license under Intersil patents, copyrights and technical information which are used in or related to the operation of the Malaysian business. This Intersil license is perpetual and irrevocable. Any intellectual property rights in the bonding diagrams, test programs, maskworks and test boards uniquely related to the Intersil products for which we provide packaging and test services are licensed to us only for use in providing those services. To the extent these licenses are not perpetual and irrevocable, we may be unable to utilize the technologies under these licenses if they are not extended or otherwise renewed or if any of these licenses are terminated by the licensor due to our uncured breach or bankruptcy. Alternatively, if we are able to renew these arrangements, we cannot assure you that they will be on the same terms as currently exist. Any failure to extend or renew these license arrangements could cause us to incur substantial liabilities and to suspend the packaging services and processes that utilized these technologies. The loss of our skilled technical, marketing and sales personnel or our key executive officers could have a material adverse effect on our research and development, marketing and sales efforts. Our competitiveness will depend in large part upon whether we can attract and retain skilled technical, marketing and sales personnel and can retain members of our executive team. Competition for skilled personnel is intense, and we may not be successful in attracting and retaining the technical personnel or executive managers we require to develop new and enhanced packaging and test services and to continue to grow and operate profitably. If we cannot attract or retain skilled personnel, we may not be able to operate successfully in the future. 12 If we encounter future labor problems, we may fail to deliver our products in a timely manner which could adversely affect our revenues and profitability. As of December 31, 2000, approximately 40% of our employees were represented by the ChipPAC Korea Labor Union. In addition, one of our Chinese subsidiaries experienced labor protests and a two-day work stoppage in July 1998 in connection with proposed work force reductions. We cannot assure you that issues with the labor union or other employees will be resolved favorably for us in the future, that we will not experience significant work stoppages in future years or that we will not record significant charges related to those work stoppages. In addition, potential efficiency enhancement efforts, including personnel reductions, following our recent acquisition of the Malaysian business may create the risk of labor problems in Malaysia or at other facilities. Our employees at our Ichon, Korea facility are represented by ChipPAC Korea Labor Union and are covered by collective bargaining and wage agreements. The Collective Agreement, which covers basic union activities, working conditions, welfare programs, etc., is effective to May 1, 2003 and the Wage Agreement is effective to May 1, 2002. New laws and regulations, currency devaluation and political instability in foreign countries, particularly in Korea, China and Malaysia, could make it more difficult for us to operate successfully. For 2000, 1999 and 1998, we generated approximately 16.7%, 11.3%, and 7.2% of total revenues, respectively, from international markets, primarily from customers in Korea and Japan. In addition, all of the facilities currently used to provide our packaging services are located in Korea, China and Malaysia. Moreover, many of our customers' operations are located in countries outside of the United States. We cannot determine if our future operations and earnings will be affected by new laws, new regulations, a volatile political climate, changes in or new interpretations of existing laws or regulations or other consequences of doing business outside the U.S., particularly in Korea, China and Malaysia. If future operations are negatively affected by these changes, our sales or profits may suffer. Fluctuations in the exchange rate of the U.S. dollar and foreign currencies could have a material adverse effect on our financial performance and profitability. A portion of our costs are denominated in foreign currencies, like the South Korean Won, the Chinese Renminbi or RMB and the Malaysian Ringgit. As a result, changes in the exchange rates of these currencies or any other applicable currencies to the U.S. dollar will affect our costs of goods sold and operating margins and could result in exchange losses. We cannot fully predict the impact of future exchange rate fluctuations on our profitability. From time to time, we may engage in exchange rate hedging activities in an effort to mitigate the impact of exchange rate fluctuations. However, we cannot assure you that any hedging technique we may implement will be effective. If it is not effective, we may experience reduced operating margins. We could suffer adverse tax and other financial consequences if U.S. or foreign taxing authorities do not agree with our interpretation of applicable tax laws. Our corporate structure is based, in part, on assumptions about the various tax laws, including withholding tax, and other relevant laws of applicable non-U.S. jurisdictions. We cannot assure you that foreign taxing authorities will agree with our interpretations or that they will reach the same conclusions. Our interpretations are not binding on any taxing authority and, if these foreign jurisdictions were to change or to modify the relevant laws, we could suffer adverse tax and other financial consequences or have the anticipated benefits of our corporate structure materially impaired. 13 Because the Malaysian business previously operated as a subsidiary of Intersil, our future financial results may be significantly different from those experienced historically. Prior to our acquisition of our Malaysian business in 2000, it was operated as a subsidiary of Intersil. All the historical revenues of the Malaysian business represent intercompany sales to Intersil on terms determined by Intersil. Although we expect to retain this business pursuant to a five-year supply agreement with Intersil, volume, product mix and pricing may change in the future, and we cannot assure you that Intersil will perform under our supply agreement. The operation of the Malaysian business as an independent entity may result in our incurring operating costs and expenses significantly greater than we anticipated prior to our acquisition of the Malaysian business. During 1999, the Malaysian business incurred costs for customer support and general and administrative activities. These costs represented expenses incurred directly by the Malaysian business and charges allocated to it by Intersil. The Malaysian business will now obtain many of these services on an arm's- length basis. However, to obtain these services after our acquisition of the Malaysian business, we entered into a three-year services agreement with Intersil under which the Malaysian business will continue to obtain a number of these services from Intersil. We cannot assure you that Intersil will perform under the services agreement or that upon termination of the agreement, we will be able to obtain similar services on comparable terms. The pro forma data contained in this prospectus are based on the historical intercompany revenues of the Malaysian business. We cannot assure you that future revenues will be consistent with these historical revenues. We entered into supply contracts with Intersil in connection with our acquisition of our Malaysian business, and any decrease in the purchase requirements of Intersil or the inability of Intersil to meet its contractual obligations could substantially reduce the financial performance of our Malaysian subsidiary. Historically, the Malaysian business generated all of its revenues from the sale of products and services to affiliated Intersil companies. As a result of our acquisition of the Malaysian business, we have numerous arrangements with Intersil, including arrangements relating to packaging and test services as a vendor to affiliated Intersil companies and other services. Any material adverse change in the purchase requirements of Intersil or in its ability to fulfill its other contractual obligations could have a material adverse effect on our Malaysian subsidiary. Moreover, we may be unable to sell any products and services to affiliated Intersil companies beyond the term of our five-year supply agreement with Intersil. We may not be able to consummate future acquisitions, and consequences of those acquisitions which we do complete may adversely affect us. We plan to continue to pursue additional acquisitions of related businesses. The expense incurred in consummating the future acquisition of related businesses, or our failure to integrate those businesses successfully into our existing business, could result in our incurring unanticipated expenses and losses. We plan to continue to pursue additional acquisitions of related businesses in the future. We may be unable to identify or finance additional acquisitions or realize any anticipated benefits from those acquisitions. Should we successfully acquire another business, the process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties and may require significant financial resources that would otherwise be available for the ongoing development or expansion of our existing operations. Possible future acquisitions could result in the incurrence of contingent liabilities and amortization expenses related to goodwill and other intangible assets, all of which could have a material adverse effect on our financial condition and operating results. In addition, we may finance future acquisitions with additional indebtedness. We have a substantial amount of outstanding indebtedness and will, subject to compliance with our debt instruments, have the ability to incur additional indebtedness. We will be required to generate cash flow from operations to service that indebtedness and there can be no assurance that we will generate sufficient cash flow to service that indebtedness. We may be required to refinance our indebtedness upon its maturity, and we cannot assure you that we will be able to refinance our indebtedness at all or on terms acceptable to us. 14 Terrorist attacks, such as the attacks that occurred in New York and Washington, D.C. on September 11, 2001, and other acts of violence or war may affect the markets on which our securities trade, the markets in which we operate, our operations and our profitability. Terrorist attacks may negatively affect our operations and your investment. There can be no assurance that there will not be further terrorist attacks against the United States or United States businesses. These attacks or armed conflicts may directly impact our physical facilities or those of our suppliers or customers. Our current facilities include administrative, sales, and R&D facilities in the United States of America and manufacturing facilities in South Korea, Malaysia and China. Furthermore, these attacks may make travel and the transportation of our supplies and products more difficult and more expensive and ultimately affect the sales of our products in the United States and overseas. Also as a result of terrorism, the United States may enter into an armed conflict which could have a further impact on our domestic and international sales, our supply chain, our production capability and our ability to deliver product to our customers. Political and economic instability in some regions of the world may also result and could negatively impact our business. The consequences of any of these armed conflicts are unpredictable, and we may not be able to foresee events that could have an adverse effect on our business or your investment. A limited number of persons indirectly control us and may exercise their control in a manner adverse to your interests. At June 20, 2001, Citicorp Venture Capital, Ltd. and its affiliates owned or had the right to acquire 23,849,399 shares or approximately 32.4% of our outstanding Class A common stock. At December 31, 2000, funds affiliated with Bain Capital, Inc. owned 16,303,749 shares or approximately 23.7%, of our outstanding Class A common stock. By virtue of this stock ownership, these entities collectively have the power to direct our affairs and will be able to determine the outcome of all matters required to be submitted to stockholders for approval, including the election of a majority of our directors, any merger, consolidation or sale of all or substantially all of our assets and amendment of our certificate of incorporation. Because a limited number of persons control us, transactions could be difficult or impossible to complete without the support of those persons. It is possible that these persons will exercise control over us in a manner adverse to your interests. If our relationship with Hynix Semiconductor, our previous owner, deteriorates, our business operations could be interrupted. Our facilities in Ichon, Korea occupy a portion of a building located on property owned by Hynix Semiconductor, a current stockholder and former majority owner. In addition, our operations at this site are dependent upon various service and support personnel employed by Hynix Semiconductor. An unfavorable change in our relations with Hynix Semiconductor could prevent us from gaining access to and effectively managing this facility and its operations, which would interrupt our business operations. Environmental, health and safety laws could require us to incur capital and operational costs to maintain compliance and could impose liability to remedy the effects of hazardous substance contamination. We are subject to liabilities and compliance obligations arising under environmental, health and safety laws. These laws impose various controls on the quality of our air and water discharges, on the storage, handling, discharge and disposal of chemicals the company uses, and on employee exposure to hazardous substances in the workplace. Environmental, health and safety laws could require us to incur capital and operational costs to maintain compliance and could impose liability to remedy the effects of hazardous substance contamination. We cannot assure you that applicable environmental, health and safety laws will not in the future impose the need for additional capital equipment or other process requirements upon the company, curtail its operations, or restrict its ability to expand its operations. The adoption of new environmental, health and safety laws, the failure to comply with new or existing laws, or issues relating to hazardous substance contamination could subject the company to future material liability. 15 RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth our consolidated ratio of earnings to fixed charges for the years ended December 31, 2000, 1999, 1998, 1997 and 1996 and for the nine months ended September 30, 2001.
September 30, 2001 -------------- (in thousands) Total indebtedness........... $362,000
Years Ended December 31, ------------------------ Nine Months Ended 2000 1999 1998 1997 1996 September 30, 2001 ---- ---- ---- ---- ---- ------------------ Ratio of earnings to fixed charges............... 1.4x -- 4.3x -- -- --
For purposes of the computation of ratio of earnings to fixed charges in the table above, earnings are defined as income (loss) before provision for income taxes and fixed charges. Fixed charges are interest costs and amortization of debt issuance cost. For the years ended December 31, 1996, 1997 and 1999 and the nine months ended September 30, 2001, earnings were insufficient to cover fixed charges by $2.7 million, $55.8 million, $4.0 million and $37.9 million, respectively. The ratios provided above are often used by investors to evaluate a company's capital structure and its ability to make payments on its debt. The ratio of earnings to fixed charges attempts to capture the relative protection that operating profitability provides our noteholders by permitting them to assess the probability of our failing to make required principal and interest payments on the notes. If adverse economic and industry conditions adversely affect our operating earnings, the subsequent worsening of this ratio would indicate to our noteholders that we are at a greater risk of failing to meet our interest payment obligations. USE OF PROCEEDS We will receive no proceeds from this offering. The selling security holders will receive the proceeds from this offering. SELLING SECURITY HOLDERS We initially issued the notes in a private placement in June 2001. The selling security holder of the notes, Citicorp Mezzanine III, L.P. may offer and sell the notes and the underlying Class A common stock pursuant to this prospectus. Citicorp Mezzanine III, L.P. holds $50,000,000 aggregate principal amount of the notes, which is all of the notes outstanding. Citicorp Mezzanine III, L.P. is an affiliate of Citicorp Venture Capital, Ltd. which, along with its affiliates, owns or has the right to acquire approximately 32.4% of our outstanding Class A common stock. This information is based on information provided by or on behalf of Citicorp Mezzanine III, L.P. We initially issued the additional 2,192,982 shares of Class A common stock to QUALCOMM Incorporated in a private placement in July 2000 in connection with the execution of a supply agreement between our two companies. The selling security holder of the additional shares of the Class A common stock, QUALCOMM Incorporated, may offer and sell those additional shares of our Class A common stock pursuant to his prospectus. QUALCOMM Incorporated holds approximately 3.2% of our outstanding Class A common stock. This information is based on information provided by QUALCOMM Incorporated. The term "selling security holders" includes, without duplication, Citicorp Mezzanine III, L.P., QUALCOMM Incorporated and their transferees, pledgees, donees or other successors. The information 16 concerning the selling security holders may change from time to time and any changed information will be set forth in supplements to this prospectus if and when necessary. The selling security holders may offer all, some or none of the notes, the underlying Class A common stock and the additional Class A common stock and as a result, no estimate can be give as to the amount of the notes, the underlying Class A common stock and the additional Class A common stock that will be held by the selling security holders upon termination of any offering. 17 PLAN OF DISTRIBUTION The notes, the underlying Class A common stock and the additional Class A common stock covered by this prospectus may be sold from time to time to purchasers directly by the selling security holders. Alternatively, the selling security holders may from time to time offer the securities through underwriters, broker-dealers or agents who may receive compensation in the form of underwriting discounts, concessions or commissions from the selling security holders and/or the purchasers of securities for whom they may act as agent. The selling security holders and any underwriters, broker-dealers or agents that participate in the distribution of the securities may be deemed to be "underwriters" within the meaning of the Securities Act, and any profit on the sale of securities by them and any discounts, commissions, concessions or other compensation received by any such underwriter, broker-dealer or agent may be deemed to be underwriting discounts and commissions under the Securities Act. We will not receive any of the proceeds from the offering of the notes or the Class A common stock by the selling security holders. Because the selling security holders may be deemed to be "underwriters" within the meaning of the Securities Act, the selling security holders will be subject to the prospectus delivery requirements of the Securities Act. We have informed the selling security holders that the anti-manipulation provisions of Regulation M promulgated under the Exchange Act may apply to their sales in the market. The notes, the underlying Class A common stock and the additional Class A common stock covered by this prospectus may be sold from time to time in one or more transactions at: . fixed prices; . prevailing market prices at the time of sale; . varying prices determined at the time of sale; or . negotiated prices, including sales below the market price. Such prices will be determined by the selling security holders or by agreement between the selling security holders and underwriters and dealers who may receive fees or commissions in connection therewith. The sale of the securities may be effected in transactions: . on any national securities exchange or quotation service on which the notes may be listed or quoted at the time of sale, including directly with market makers acting as principal; . in the over-the-counter market; . in transactions other than on such exchanges or in the over-the-counter market, including privately negotiated transactions; . through short sales and transactions covering short sales; . through the writing of options; or . in any other lawful manner, including under Rule 144 rather than pursuant to this prospectus. These transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as an agent on both sides of the trade. The selling security holders may also transfer the securities to their partners, members or shareholders. At the time of a particular offering of the notes, the underlying Class A common stock or the additional Class A common stock by a selling security holder, a supplement to this prospectus, if required, will be distributed setting forth the aggregate amount and type of securities being offered and the terms of the offering, including the name or names of any underwriters, broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling security holders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers. 18 To comply with the securities laws of certain jurisdictions, if applicable, the notes, the underlying Class A common stock or the additional Class A common stock will be offered or sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain jurisdictions the notes, the underlying Class A common stock or the additional Class A common stock may not be offered or sold (unless they have been registered or qualified for sale) in such jurisdictions or an exemption from registration or qualification is available and is complied with. We originally sold the notes and the underlying Class A common stock in June 2001 in a private placement. We agreed pursuant to a registration rights agreement to use commercially reasonable efforts to cause the registration statement to which this prospectus relates to become effective within 220 days after the date the notes were issued and to keep the registration statement effective until the earlier of two years or the time when all of the notes and the underlying Class A common stock have been sold pursuant to this registration statement or Rule 144 or can be sold pursuant to Rule 144(k). We originally issued the additional Class A common stock in July of 2001 in connection with the execution of a supply agreement by us and QUALCOMM. At that time, pursuant to a registration rights agreement, we granted to QUALCOMM "piggy-back" registration rights. The additional Class A common stock is being registered in the registration statement to which this prospectus relates because QUALCOMM has exercised its registration rights under that registration rights agreement. Pursuant to these registration rights agreements, we will pay all expenses of the registration of the notes, the underlying Class A common stock and the additional Class A common stock including, without limitation, SEC filing fees and expenses of compliance with state securities or "blue sky" laws and the reasonable fees and expenses of counsel to the selling security holders of the notes, the underlying Class A common stock and the additional Class A common stock. The selling security holders of the notes, the underlying Class A common stock and the additional Class A common stock are responsible for all underwriting discounts and selling commissions, if any. We and the selling security holders of the notes, the underlying Class A common stock and the additional Class A common stock will indemnify each other against certain liabilities, including certain liabilities under the Securities Act. 19 DESCRIPTION OF NOTES General In this section of the prospectus, unless the context requires otherwise, the words "ChipPAC," "company," "we," "our," "ours" and "us" refer only to ChipPAC, Inc. and not to any of its subsidiaries. We issued the notes under an indenture dated as of June 15, 2001 by and between us and U.S. Bank, N.A., formerly known as Firstar Bank, N.A., as trustee. The terms of the notes include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended. The following description is only a summary of the material provisions of the indenture, which is filed as an exhibit to the registration statement of which this prospectus forms a part. We urge you to read the indenture because it, and not this description, defines your rights as holders of the notes. You may request copies of these agreements at our address provided under "Where You Can Find More Information." Brief Description of the Notes These notes: . are unsecured general obligations of ChipPAC; . are subordinated in right of payment to all existing and future senior indebtedness of ChipPAC; as described under "--Subordination of the Notes"; and . are convertible into shares of our Class A common stock as described under "--Conversion of the Notes." Principal, Maturity and Interest The notes: . have been issued in the aggregate principal amount of $50.0 million; . have been issued in denominations of $1,000 and any integral multiple of $1,000; and . will mature on June 15, 2011, unless earlier redeemed by us at our option or purchased by us at your option upon a change in control. The indenture does not limit our or our subsidiaries' ability to pay dividends, incur debt or issue or repurchase securities. In addition, there are no financial covenants in the indenture. You are not protected under the indenture in the event of a highly leveraged transaction or a change in control of ChipPAC, except to the extent described under "--Purchase of Notes at Your Option Upon a Change in Control." The notes bear interest at the annual rate of 8% subject to increases described in "--Registration Rights" below. Interest will be payable on June 15 and December 15 of each year beginning December 15, 2001, subject to limited exceptions if the notes are converted, redeemed or purchased prior to the interest payment date. The record dates for payment of interest will be June 1 and December 1. We may, at our option, pay interest on the notes by check mailed to the holders. However, a holder with an aggregate principal amount of notes in excess of $2,000,000 will be paid by wire transfer of immediately available funds at its election. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Contingent upon our compliance with applicable provisions of the indenture, we are permitted to issue more notes, which we refer to as "add on securities," without gaining the approval of the holders of the notes; provided, however, that so long as Citicorp Mezzanine III, L.P. or any of its affiliates remains a holder of the notes, no add on securities can be issued which would result in the aggregate principal amount of all add on 20 securities exceeding $49.0 million unless Citicorp Mezzanine III, L.P. or its affiliates who hold notes consent. The add on securities will have terms and conditions identical to those of the notes except that add on securities: . may have a different issue date than the other outstanding notes; . may have a different interest rate than is payable on the other notes; . may have a different conversion price than the other outstanding notes; and . may have terms specified in the add on security board resolutions or add on security supplemental indenture for such add on securities making appropriate adjustments applicable to such add on securities in order to conform to and ensure compliance with the Securities Act, or other applicable securities laws, which are not adverse in any material respect to the holder of any outstanding notes (other than the add on securities) and which shall not affect the rights or duties of the trustee. We will maintain an office in the City of New York where the notes may be presented for registration, transfer, exchange, payment or conversion. This office is initially an office or agency of the trustee. The notes are currently issued in certificated form in the name of Citicorp Mezzanine III, L.P. Any holder of certificated notes may exchange those certificated notes for an interest in one or more global notes upon delivery of those certificated notes to the registrar of the notes in the manner described in the indenture. See "--Book Entry, Delivery and Form". There is no service charge for any registration of transfer or exchange of notes. We may, however, require holders to pay a sum sufficient to cover any tax or other governmental charge payable in connection with certain transfers or exchanges. Conversion of the Notes You have the right, at your option, to convert your notes into shares of our Class A common stock at any time prior to the close of business on the maturity date, unless previously redeemed or purchased, at the conversion price of $9.96 per share, subject to the adjustments described below. Except as described below, we will not make any payment or other adjustment for accrued interest or dividends on any Class A common stock issued upon conversion of the notes. If you submit your notes for conversion between the close of business on a record date and the opening of business on the next interest payment date, you must pay funds in an amount equal to the interest payable on the converted principal amount, except if the submitted notes or portions of notes are called for redemption or are subject to purchase following a change in control on a date during the period from the close of business on a record date and ending on the opening of business on the first business day after the next interest payment date, or if this interest payment date is not a business day, the second business day after the interest payment date. As a result of the foregoing provisions, if the exception described in the preceding sentence does not apply and you surrender your notes for conversion on a date that is not an interest payment date, you will not receive any interest for the period from the interest payment date next preceding the date of conversion to the date of conversion or for any later period. We will not issue fractional shares of Class A common stock upon conversion of notes. Instead, we will pay a cash amount based upon the closing market price of the Class A common stock on the last trading day prior to the date of conversion. If the notes are called for redemption or are submitted for purchase following a change in control, your conversion rights on the notes called for redemption or so submitted for purchase will expire at the close of business on the last business day before the redemption date or purchase date, as the case may be, unless we default in the payment of the redemption price or purchase price. If you have submitted your notes for purchase upon a change in control, you may only convert your notes if you withdraw your election in accordance with the indenture. 21 The conversion price will be adjusted upon the occurrence of: (1)the issuance of shares of our Class A common stock as a dividend or distribution on our Class A common stock; (2)the subdivision or combination of our outstanding Class A common stock; (3)the issuance to all or substantially all holders of our Class A common stock of rights or warrants entitling them for a period of not more than 60 days to subscribe for or purchase our Class A common stock, or securities convertible into our Class A common stock, at a price per share or having a conversion price per share less than the then current market price per share, provided that the conversion price will be readjusted to the extent that such rights or warrants are not exercised prior to the expiration, and provided further that if those rights or warrants are only exercisable upon the occurrence of certain events, then the conversion price will not be adjusted unless and until those triggering events occur; (4)the distribution to all or substantially all holders of our Class A common stock of shares of our capital stock (other than our Class A common stock), evidences of indebtedness or other non-cash assets, excluding: . dividends, distributions and rights or warrants referred to in clause (1) or (3) above or clause (5) below; and . dividends or distributions exclusively in cash referred to in clause (5) below. (5)the dividend or distribution to all or substantially all holders of our Class A common stock of all-cash distributions in an aggregate amount that together with (A) any cash and the fair market value of any other consideration payable in respect of any tender offer by us or any of our subsidiaries for our Class A common stock consummated within the preceding 12 months not triggering a conversion price adjustment and (B) all other all-cash distributions to all or substantially all holders of our Class A common stock made within the preceding 12 months not triggering a conversion price adjustment, exceeds an amount equal to 12.5% of our market capitalization on the business day immediately preceding the day on which we declare such distribution; and (6)the purchase of our Class A common stock pursuant to a tender offer or exchange offer (within the meaning of the U.S. federal securities laws) made by us or any of our subsidiaries to the extent that the same involves aggregate consideration that together with (A) any cash and the fair market value of any other consideration payable in respect of any tender offer by us or any of our subsidiaries for our Class A common stock consummated within the preceding 12 months not triggering a conversion price adjustment and (B) all-cash distributions to all or substantially all holders of our Class A common stock made within the preceding 12 months not triggering a conversion price adjustment, exceeds an amount equal to 12.5% of our market capitalization on the expiration date of such tender offer. In addition, if we distribute rights or warrants, other than those referred to in clause (3) of the preceding paragraph, to all or substantially all holders of our Class A common stock, so long as the rights or warrants have not expired or been redeemed by us, the holder of any note surrendered for conversion will be entitled to receive, in addition to the shares of Class A common stock issuable upon conversion, the following: . if conversion occurs on or prior to the date for distribution of certificates evidencing rights or warrants, the holder will be entitled to the same number of rights or warrants that a holder of a number of shares of Class A common stock equal to the number of conversion shares is entitled; and . if conversion occurs after the distribution date, the holder will be entitled to the same number of rights or warrants that a holder of the number of shares of Class A common stock into which the note was convertible immediately prior to the distribution date would have been entitled on the distribution date, in accordance with the terms and provisions applicable to the rights or warrants. 22 In the event of: . any reclassification of our Class A common stock; or . a consolidation, merger or combination involving ChipPAC; or . a sale or conveyance to another person of the property and assets of ChipPAC as an entirety or substantially as an entirety, in which holders of our outstanding Class A common stock would be entitled to receive stock, other securities, other property, assets or cash for their Class A common stock, holders of notes generally are entitled to convert their notes into the same type of consideration received by Class A common stockholders immediately prior to one of these types of events. We are permitted to reduce the conversion price of the notes by any amount for a period of at least 20 days if our board of directors approves the reduction. We are required to give at least 15 days prior notice of any reduction in the conversion price. We may also reduce the conversion price to avoid income tax to holders of our Class A common stock in connection with a dividend or distribution of stock or similar event. You may, in some circumstances, be deemed to have received a distribution or dividend subject to United States federal income tax as a result of an adjustment or the non-occurrence of an adjustment to the conversion price. No adjustment in the conversion price is required unless it will result in a change in the conversion price of at least one percent. Any adjustment not made will be taken into account in subsequent adjustments. Except as stated above, we will not adjust the conversion price for the issuance of our Class A common stock or any securities convertible into or exchangeable for our Class A common stock or the right to purchase our Class A common stock or such convertible or exchangeable securities. Subordination of the Notes The payment of the principal of, premium, if any, and interest on the notes is subordinated, to the extent provided in the indenture, to the prior payment in full, in cash or other payment satisfactory to the holders of senior indebtedness, of all senior indebtedness. Upon any distribution of our assets upon any dissolution, winding-up, liquidation or reorganization, or in bankruptcy, insolvency, receivership or similar proceedings, payment of the principal of, premium, if any, and interest (including any additional interest) on the notes is subordinated in right of payment to the prior payment in full, in cash or other payment satisfactory to the holders of senior indebtedness, of all senior indebtedness. In the event of any acceleration of the notes because of an event of default, the holders of any senior indebtedness then outstanding would be entitled to payment in full, in cash or other payment satisfactory to the holders of senior indebtedness, of all obligations with respect to such senior indebtedness before the holders of notes are entitled to receive any payment or other distribution. We are required to promptly notify holders of senior indebtedness if payment of the notes is accelerated because of an event of default. We also may not make any payment on the notes if: . a default in the payment of designated senior indebtedness occurs and is continuing beyond any applicable grace period unless the default has been cured or waived; or . any other default occurs and is continuing with respect to designated senior indebtedness that permits holders of the designated senior indebtedness to accelerate its maturity and the trustee receives a notice of the default, which we refer to as a payment blockage notice, from any person permitted to give this notice under the indenture. 23 We may resume making payments on the notes: . when the default is cured or waived or ceases to exist; or . in the case of default not related to a payment, 179 days after receipt of the payment blockage notice. No new period of payment blockage may be commenced pursuant to a payment blockage notice unless and until 365 days have elapsed since our receipt of the prior payment blockage notice. No default that existed on the date of delivery of any payment blockage notice to the trustee may be the basis for a subsequent payment blockage notice. By reason of the subordination provisions described above, in the event of our bankruptcy, dissolution or reorganization, holders of senior indebtedness may receive more, ratably, and the holders of notes may receive less, ratably, than the other creditors of ChipPAC. These subordination provisions will not prevent the occurrence of any event of default under the indenture. The indenture does not limit our ability to incur additional indebtedness, including senior indebtedness. The incurrence of significant amounts of additional debt could adversely affect our ability to service our debt, including the notes. If a distribution is made to holders of notes that, due to the subordination provisions, should not have been made to them, the holders of notes are required to hold it in trust for the holders of senior indebtedness and pay it over to them as their interests may appear. As of September 30, 2001, we had approximately $333.6 million of outstanding indebtedness that would constitute senior indebtedness. The indenture does not limit our ability or the ability of our subsidiaries to incur senior indebtedness or any other indebtedness. Certain Definitions "credit facility" means the Credit Agreement, dated as of August 5, 1999, as amended and restated as of June 30, 2000, and as further amended as of March 13, 2001 and June 8, 2001, by and among ChipPAC International Company Limited, ChipPAC, certain of its other subsidiaries, the lenders referred to therein and Credit Suisse First Boston, as administrative agent, together with the related documents thereto, including without limitation the term loans and revolving loans thereunder, any guarantees and security documents, as amended, extended, renewed, restated, supplemented or otherwise modified, in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions, from time to time, and any agreement, and related document, governing indebtedness incurred to refund or refinance, in whole or in part, the borrowings and commitments then outstanding or permitted to be outstanding under the credit agreement or a successor credit agreement, whether by the same or any other lender or group of lenders. "designated senior indebtedness" means (1)the company's obligations under the credit facility (including the company's guarantee of the credit facility); provided, however, that bank indebtedness outstanding under any credit agreement that is refinanced in part, but not in whole, shall only constitute designated senior indebtedness if it meets the requirements of clause (2) below, and (2)any other senior indebtedness that, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders of that senior indebtedness are committed to lend up to, at least $10.0 million and is specifically designated in the instrument evidencing or governing the senior indebtedness as "designated senior indebtedness" for purposes of the indenture. 24 "indebtedness" means: (1)all of our indebtedness, obligations and other liabilities, contingent or otherwise, for borrowed money, including: . overdrafts, foreign exchange contracts, currency exchange agreements, interest rate protection agreements, and any loans or advances from banks, whether or not evidenced by notes or similar instruments; or . credit or loan agreements, bonds, debentures, notes or other written obligations, whether or not the recourse of the lender is to all of our assets or to only a portion of our assets; other than any account payable or other accrued current liability or obligation incurred in the ordinary course of business in connection with the obtaining of materials or services; (2)all of our reimbursement obligations and other liabilities, contingent or otherwise, with respect to letters of credit, bank guarantees or bankers' acceptances; (3)all of our obligations and liabilities, contingent or otherwise, in respect of leases required, in conformity with generally accepted accounting principles, to be accounted for as capitalized lease obligations on our balance sheet; (4)all of our obligations evidenced by a note or similar instrument given in connection with the acquisition of any businesses, properties or assets of any kind; (5)all of our obligations issued or assumed as the deferred purchase price of property or services, but excluding trade accounts payable and accrued liabilities arising in the ordinary course of business; (6)all of our obligations and other liabilities, contingent or otherwise, under any lease or related document, including a purchase agreement, in connection with the lease of real property or improvements (or any personal property included as part of the lease) which provides that we are contractually obligated to purchase or cause a third party to purchase the leased property and thereby guarantee a residual value of leased property to the lessor and all of our obligations under the lease or related document to purchase or to cause a third party to purchase the leased property (whether or not the lease transaction is characterized as an operating lease or a capitalized lease in accordance with generally accepted accounting principles); (7)all of our obligations, contingent or otherwise with respect to an interest rate, currency or other swap, cap, floor or collar agreement, hedge agreement, forward contract, or other similar instrument or agreement or foreign currency hedge, exchange, purchase or similar instrument or agreement; (8)all of our direct or indirect guarantees or similar agreements to purchase or otherwise acquire or otherwise assure a creditor against loss in respect of indebtedness, obligations or liabilities of another person of the kind described in clauses (1) through (7); and (9)any and all deferrals, renewals, extensions and refundings of, or amendments, modifications, supplements to, any indebtedness, obligation or liability of the kind described in clauses (1) through (8). The amount of indebtedness at any date shall be the outstanding balance as of that date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations as of that date; provided, however, that the amount outstanding at any time of any indebtedness issued with original issue discount shall be deemed to be the face amount of such indebtedness less the remaining unamortized portion of the original issue discount of such indebtedness at that time as determined in accordance with generally accepted accounting principles. "senior indebtedness" means the principal of, premium, if any, interest including all interest accruing subsequent to the commencement of any bankruptcy or similar proceeding, whether or not a claim for post-petition interest is allowable as a claim in any proceeding of that nature, and rent payable on or in connection 25 with, and all fees, costs, expenses and other amounts accrued or due on or in connection with, indebtedness whether secured or unsecured, absolute or contingent, due or to become due, outstanding on the date of the indenture or thereafter created, incurred, assumed, guaranteed or in effect guaranteed by ChipPAC, including all deferrals, renewals, extensions or refundings of, or amendments, modifications or supplements to, the foregoing, unless in the case of any particular indebtedness the instrument creating or evidencing the same or the assumption or guarantee thereof expressly provides that the indebtedness shall not be senior in right of payment to the notes or expressly provides that the indebtedness is on the same basis or junior to the notes. Senior indebtedness does not include, among other things, any indebtedness of the company to any subsidiary of the company or any obligation for U.S. federal, state, local or other taxes. Provisional Redemption by ChipPAC We may redeem any portion of the notes at any time prior to June 15, 2004 upon at least 20 and not more than 60 days' notice by mail to the holders of the notes, at a redemption price equal to $1,000 per $1,000 principal amount of the notes redeemed plus accrued and unpaid interest to but excluding the redemption date if (1)the closing price of our Class A common stock has exceeded 150% of the conversion price for at least 20 trading days in any consecutive period of 30 trading days ending on the trading day prior to the mailing of the notice of redemption, and (2)the shelf registration statement covering resales of the notes and the Class A common stock is effective and available for use and expected to remain effective and available for use for the 30 days following the redemption date, unless registration is no longer required. Optional Redemption by ChipPAC Except as set forth above in the section entitled "--Provisional Redemption by ChipPAC," we may not redeem the notes at our option prior to June 15, 2004. Thereafter, we may redeem the notes at our option in whole, or in part, upon not less than 20 nor more than 60 days' notice by mail to holders of the notes. The redemption prices (expressed as a percentage of principal amount) are as follows for notes redeemed during the periods set forth below:
Year Percentage ---- ---------- Beginning on June 15, 2004 and ending on June 14, 2005 104.00% Beginning on June 15, 2005 and ending on June 14, 2006 103.33% Beginning on June 15, 2006 and ending on June 14, 2007 102.67% Beginning on June 15, 2007 and ending on June 14, 2008 102.00% Beginning on June 15, 2008 and ending on June 14, 2009 101.33% Beginning on June 15, 2009 and ending on June 14, 2010 100.67% Beginning on June 15, 2010 and thereafter............. 100.00%
In each case, we will pay accrued interest to, but not including, the redemption date; provided that if the redemption date falls after an interest payment record date and on or before an interest payment date, then the interest payment shall be payable to holders of record on the relevant record date. If fewer than all of the notes are to be redeemed, the trustee will, not more than 60 days prior to the date of redemption, select the notes to be redeemed by lot, or in its discretion, on a pro rata basis. Notes in denominations of $1,000 may only be redeemed in whole. If a portion of your notes is selected for partial redemption and before your right to convert those notes into stock terminates, you convert a portion of your notes, the converted portion will be deemed to be the portion selected for redemption. 26 No sinking fund is provided for the notes. However, under certain circumstances, we may be required to purchase notes as described under the caption "--Purchase of Notes at Your Option Upon a Change in Control". We may at any time and from time to time purchase notes in the open market or otherwise. Purchase of Notes at Your Option Upon a Change in Control If a change in control occurs, you have the right to require us to purchase all or any part of your notes no less than 20 and no more than 30 business days after we give you notice of the occurrence of a change in control, or if we fail to give you notice, on the 40th business day following the change in control, at a purchase price equal to 100% of the principal amount of the notes plus accrued and unpaid interest to, but excluding, the purchase date. Notes submitted for purchase must be in a principal amount of $1,000 or multiples of $1,000. We will mail to the trustee and to each holder of a note a written notice of the change in control within 10 business days after the occurrence of a change in control. This notice will state, among other things: . the terms and conditions of the change in control; . the procedures required for exercise of the change in control purchase feature including the purchase price and date; and . your right to require us to purchase the notes. You must deliver written notice of your exercise of this purchase right to a paying agent at any time prior to the close of business on the business day prior to the change in control purchase date. The written notice must specify the notes for which the purchase right is being exercised. If you wish to withdraw this election, you must provide a written notice of withdrawal to the paying agent at any time prior to the close of business on the business day prior to the change in control purchase date. A change in control will be deemed to have occurred if any of the following occurs: . any "person" or "group" (other than one or more permitted holders) is or becomes the "beneficial owner," directly or indirectly, of shares of voting stock of ChipPAC representing 50% or more of the total voting power of all outstanding classes of voting stock of the company or such person or group has the power, directly or indirectly, to elect a majority of the members of the board of directors of ChipPAC; . ChipPAC consolidates with, or merges with or into, another person or ChipPAC sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of the assets of ChipPAC, or any person consolidates with, or merges with or into, ChipPAC, in any such event other than pursuant to a transaction in which the persons that "beneficially owned," directly or indirectly, the shares of voting stock of ChipPAC immediately prior to such transaction "beneficially own," directly or indirectly, shares of voting stock of ChipPAC, representing at least a majority of the total voting power of all outstanding classes of voting stock of the surviving or transferee person; or . ChipPAC is dissolved or liquidated. However, a change in control will not be deemed to have occurred if either: . the last sale price of our Class A common stock for any five trading days during the ten trading days immediately preceding the change in control is at least equal to 105% of the conversion price in effect on that trading day; or . in the case of a merger or consolidation, at least 90% of the consideration, excluding cash payments for fractional shares in the merger or consolidation constituting the change in control, consists of common stock traded on a United States national securities exchange or quoted on The Nasdaq National Market (or which will be so traded or quoted when issued or exchanged in connection with such change in control) and as a result of such transaction or transactions the notes become convertible solely into that common stock. 27 For purposes of this change in control definition: . "person" and "group" have the meanings given to them under Sections 13(d) and 14(d) of the Exchange Act or any successor provisions, and the term "group" includes any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act, or any successor provision. . "beneficial owner" will be determined in accordance with Rule 13d-3 under the Exchange Act, as in effect on the date of the indenture, except that the number of shares of voting stock of ChipPAC shall be deemed to include, in addition to all outstanding shares of voting stock of ChipPAC and unissued shares deemed to be held by the "person" or "group" or other person with respect to which the change in control determination is being made, all unissued shares deemed to be held by all other persons. . "beneficially owned" has a meaning correlative to that of "beneficial owner." . "permitted holders" means the principals and any related party thereto and any group of investors if deemed to be a "person" (as such term is used in Section 13(d)(3) of the Exchange Act) by virtue of the shareholders agreement, as the same may be amended, modified or supplemented from time to time, provided that . a principal is party to the shareholders agreement; . the persons party to the shareholders agreement, as so amended, supplemented or modified from time to time, that were not parties and are not affiliates of persons who were parties to the shareholders agreement as of August 5, 1999, together with their respective affiliates (collectively, the "new investors"), are not direct or indirect beneficial owners (determined without reference to the shareholders agreement) of more than 50% of the voting stock owned by all parties to the shareholders agreement as so amended, supplemented or modified; and . the new investors, individually or in the aggregate, do not, directly or indirectly, have the right, pursuant to the shareholders agreement (as so amended, supplemented or modified from time to time) or otherwise to designate more than 50% of the members of the board of directors of the company or any direct or indirect parent entity of the company. . "principal" means Bain Capital, Inc., SXI Group LLC, Citicorp Venture Capital, Ltd. and any officer, employee or director of Citicorp Venture Capital, Ltd. or any trust, partnership or other entity established solely for the benefit of those officers, employees or directors. . "related party" with respect to any principal means: . any controlling stockholder or 80% (or more) owned subsidiary of the principal; . any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or persons beneficially holding an 80% or more controlling interest of which consist of that principal and/or the other persons referred to in the immediately preceding bullet; or . any affiliate of any principal. . "shareholders agreement" means the Amended and Restated Shareholders Agreement, dated August 5, 1999, by and among Hyundai Electronics Incorporated, Hyundai Electronics America, SXI Group LLC, certain related parties of Bain Capital, Inc. and the company. . "unissued shares" means shares of voting stock not outstanding that are subject to options, warrants, rights to purchase or conversion privileges exercisable within 60 days of the date of determination of a change in control. . "voting stock" means any class or classes of capital stock pursuant to which the holders of capital stock under ordinary circumstances have the power to vote in the election of the board of directors, managers or trustees of any person or other persons performing similar functions irrespective of whether or not, at the time capital stock of any other class or classes shall have, or might have, voting power by reason of the occurrence of any contingency. 28 The term "all or substantially all" as used in the definition of change in control will likely be interpreted under applicable state law and will be dependent upon particular facts and circumstances. There may be a degree of uncertainty in interpreting this phrase. As a result, we cannot assure you how a court would interpret this phrase under applicable law if you elect to exercise your rights following the occurrence of a transaction which you believe constitutes a transfer of "all or substantially all" or our assets. We will: . comply with the provisions of Rule 13e-4 and Rule 14e-1, if applicable, under the Exchange Act; . file a Schedule TO or any successor or similar schedule, form or report if required under the Exchange Act; and . otherwise comply with all federal and state securities laws in connection with the offer by us to purchase the notes upon a change in control. This change in control purchase feature may make more difficult or discourage a takeover of ChipPAC and the removal of incumbent management. The change in control purchase feature is not part of a plan by management to adopt a series of anti-takeover provisions. Instead, the change in control purchase feature is a result of negotiations between us and the initial purchaser of the notes. We could, in the future, enter into certain transactions, including recapitalizations, that do not constitute a change in control but would increase the amount of indebtedness, including senior indebtedness, outstanding or otherwise adversely affect a holder. Neither we nor our subsidiaries are prohibited from incurring indebtedness, including senior indebtedness, under the indenture. The incurrence of significant amounts of additional indebtedness could adversely affect our ability to service our debt, including the notes. We may not repurchase any note at any time when the subordination provisions of the indenture otherwise would prohibit us from making such a repurchase. If we fail to repurchase the notes when required, this failure will constitute an event of default under the indenture whether or not repurchase is permitted by the subordination provisions of the indenture. If a change in control were to occur, we may not have sufficient funds to pay the change in control purchase price for the notes tendered by holders. In addition, our senior credit facility and the indenture governing our 123/4% senior subordinated notes contain (and future indebtedness that we may incur may contain) change in control provisions that permit holders of that debt to accelerate or require us to repurchase that indebtedness upon the occurrence of events similar to a change in control. We cannot assure you that sufficient funds will be available when necessary to make any required purchases. See "Risk Factors--We may not have the ability to raise the funds necessary to finance the change in control offer required by the indenture governing the notes." Our failure to repurchase the notes upon a change in control will result in an event of default under the indenture, whether or not the purchase is permitted by the subordination provisions of the indenture. The provisions under the indenture relative to our obligation to offer to purchase the notes as a result of a change in control (and the other provisions of this Section) may be waived or modified with the written consent of the holders of a majority in aggregate principal amount of the notes then outstanding. Events of Default Each of the following will constitute an event of default under the indenture: (1)we fail to pay any interest, including any additional interest we may be required to pay, see "--Registration Rights" below, on any note when due if such failure continues for 30 days, whether or not prohibited by the subordination provisions of the indenture; 29 (2)we fail to pay principal or premium, if any, on any note when due, whether or not prohibited by the subordination provisions of the indenture; (3)we fail to perform any other covenant required of us in the notes or the indenture if the failure continues for 60 days after notice is given in accordance with the indenture; (4)we fail to provide timely notice of a change in control; or (5)certain events in bankruptcy, insolvency or reorganization of ChipPAC. If an event of default, other than an event of default described in clause (5) above, occurs and is continuing, either the trustee or the holders of at least 25% in aggregate principal amount of the outstanding notes may declare the principal amount of the notes to be due and payable immediately. If an event of default described in clause (5) above occurs, the principal amount of the notes will automatically become immediately due and payable. Any payment by us on the notes following any such acceleration will be subject to the subordination provisions described above. After any such acceleration, but before a judgment or decree based on acceleration, the holders of a majority in aggregate principal amount of the notes may, under certain circumstances, rescind and annul such acceleration. Subject to the trustee's duties in the case of an event of default, the trustee will not be obligated to exercise any of its rights or powers at the request of the holders, unless the holders have offered to the trustee reasonable indemnity. Subject to the trustee's indemnification, the holders of a majority in aggregate principal amount of the outstanding notes will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee with respect to the notes. No holder will have any right to institute any proceeding under the indenture, or for the appointment of a receiver or a trustee, or for any other remedy under the indenture unless: . the holder has given to the trustee written notice of a continuing event of default; . the holders of at least 25% in aggregate principal amount of the outstanding notes have made a written request and have offered reasonable indemnity to the trustee to institute the proceeding as trustee; . the trustee has not complied with the request within 60 days after receipt of the request and the offer of indemnity; and . the holders of a majority in principal amount of the outstanding notes have not given the trustee a direction inconsistent with the request within the 60-day period. However, these limitations do not apply to a suit instituted by a holder for the enforcement of payment of the principal of, or any premium or interest on, any note on or after the applicable due date or the right to convert the note. Generally, the holders of not less than a majority of the aggregate principal amount of the then outstanding notes may waive any default or event of default unless: . we fail to pay principal, premium or interest on any note when due; . we fail to convert any note into Class A common stock; or . we fail to comply with any of the provisions of the indenture or the notes that would require the consent of the holder of each outstanding note affected. We are required to furnish to the trustee, on an annual basis, a statement by our officers as to whether or not ChipPAC, to the officers' knowledge, is in default in the performance or observance of any of the terms, provisions and conditions of the indenture, specifying any known defaults. 30 Modification and Waivers We and the trustee may make certain modifications and amendments to the indenture or the notes without notice to or the consent of any holder, including modifications or amendments to comply with the merger provisions described in the indenture, to provide for uncertificated notes in addition to or in place of certificated notes, to comply with the provisions of the Trust Indenture Act, to comply with any requirements of the SEC in connection with qualifying, or maintaining the qualification of, the indenture under the Trust Indenture Act, to appoint a successor trustee, to cure any ambiguity, defect or inconsistency, to provide for the issuance of add on securities, or to make any other change that does not adversely affect the rights of the holders. We and the trustee may make other modifications and amendments to the indenture or the notes with the consent of the holders of a majority in aggregate principal amount of the then outstanding notes. However, neither we nor the trustee may make any modification or amendment without the consent of the holder of each outstanding note if such modification or amendment would: . change the stated maturity of the principal of, or interest on, any note; . reduce the principal amount of, or any premium or interest on, any note; . reduce the amount of principal payable upon acceleration of the maturity of any note; . change the place or currency of payment of principal of, or any premium or interest on, any note; . impair the right to institute suit for the enforcement of any payment on, or with respect to, any note; . modify the subordination provisions in a manner materially adverse to the holders of notes; . adversely affect the right of holders to convert notes other than as provided in or under the indenture; . reduce the percentage in principal amount of outstanding notes whose holders are required to consent to a modification or amendment of the indenture; . reduce the percentage in principal amount of outstanding notes necessary for waiver of compliance with certain provisions of the indenture or for waiver of certain defaults; or . modify the foregoing requirements. Consolidation, Merger and Sale of Assets We may not consolidate with or merge into any other person, in a transaction in which we are not the surviving corporation, or convey, transfer or lease our properties and assets substantially as an entirety to any successor person, unless: . the successor person, if any, is a corporation or limited liability company organized and validly existing under the laws of the United States, any state of the United States or the District of Columbia or a jurisdiction outside the United States if it has its common stock or American Depository Shares representing its common stock trading on a national securities exchange in the United States or through the Nasdaq National Market (provided, however, that we deliver to the trustee an opinion of legal counsel stating that you will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the merger, consolidation or asset sale and that you will be subject to U.S. federal income tax on the same amounts and at the same times as would have been the case if the merger, consolidation or asset sale had not occurred), and the successor person expressly assumes our obligations on the notes and under the indenture; . immediately after giving effect to the transaction, no default or event of default shall have occurred and be continuing; and . other conditions specified in the indenture are met. 31 Registration Rights The following summary of the registration rights provided in the registration rights agreement and the notes is not complete. You should refer to the registration rights agreement for a full description of the registration rights that apply to the notes. We have agreed to file a shelf registration statement under the Securities Act within 150 days after the first date of original issuance of the notes to register resales of the notes and the shares of Class A common stock into which the notes are convertible, referred to as registrable securities. We will use commercially reasonable efforts to have this shelf registration statement declared effective within 220 days after the first date of original issuance of the notes, and to keep it effective until the earliest of: (1)two years after the effective date (or for a longer period if extended under circumstances set forth in the registration rights agreement); (2)the date when all registrable securities shall have been registered under the Securities Act and disposed of; and (3)the date on which all registrable securities: . to the extent held by a non-affiliate of the company, may be sold by the holders to the public pursuant to Rule 144 under the Securities Act; . to the extent held by affiliate of the company, are sold by the holders of the notes to the public, pursuant to Rule 144, or . saleable by the holders of the notes pursuant to Rule 144(k). We will be permitted to suspend the use of the prospectus which is a part of the registration statement for a period not to exceed 90 consecutive days or an aggregate of 180 days in any twelve-month period under certain circumstances relating to pending corporate developments, public filings with the SEC and similar events. A holder of registrable securities that sells registrable securities pursuant to the shelf registration statement generally is required to provide information about itself and the specifics of the sale, be named as a selling security holder in the related prospectus and deliver a prospectus to purchasers, be subject to relevant civil liability provisions under the Securities Act in connection with such sales and be bound by the provisions of the registration rights agreements which are applicable to such holder. From and after the second anniversary of the issuance of the registrable securities, the holders of at least 50% of the outstanding registrable securities may demand that we register their registrable securities, subject to certain conditions. If: (1)on or prior to the 150th day after the first date of original issuance of the notes, the shelf registration statement has not been filed with the SEC; (2)on or prior to the 220th day after the first date of original issuance of the notes, the shelf registration statement has not been declared effective by the SEC; (3)we fail with respect to a note holder that supplies the appropriate selling stockholder questionnaire to amend or supplement the shelf registration statement in the manner set forth in the registration rights agreement; (4)after the shelf registration statement has been declared effective, the shelf registration statement ceases to be usable in connection with resales of notes and the Class A common stock issuable upon the conversion of the notes in accordance with and during the periods specified in the registration rights 32 agreement because we have suspended the shelf registration statement for periods beyond those permitted by the registration rights agreement; (5)after the shelf registration statement has been declared effective, the shelf registration statement ceases to be usable in connection with resales of notes and the Class A common stock issuable upon the conversion of the notes in accordance with and during the periods specified in the registration rights agreement and we do not cure the shelf registration statement within fifteen business days by filing a post-effective amendment or a report pursuant to the Exchange Act; (6)on or prior to the 120th day after the requisite holders of the registrable securities exercise their demand registration rights, a registration statement relating to the demand registration has not been filed with the SEC; or (7)on or prior to the 180th day after the requisite holders of the registrable securities exercise their demand registration rights, a registration statement relating to the demand registration has not been declared effective by the SEC; (each event referred to in clauses (1) through (7) being a registration default), additional interest will accrue daily on registrable securities over and above the rate set forth in the title of the notes, from and including the date on which any such registration default shall occur to but excluding the date on which all registration defaults have been cured, at the annual rate of 0.50% for the notes or, if applicable, on an equivalent basis per share (subject to adjustment in the case of stock splits, stock recombinations, stock dividends and the like) of Class A common stock constituting registrable securities. We have no other liabilities for monetary damages with respect to our registration obligations. With respect to each holder, our obligations to pay additional interest remain in effect only so long as the notes and the Class A common stock issuable upon the conversion of the notes held by the holder are "registrable securities" within the meaning of the registration rights agreement. We will pay all expenses of the shelf registration statement, provide each holder that is selling registrable securities pursuant to the shelf registration statement copies of the related prospectus and take other actions as are required to permit, subject to the foregoing, registered resales of the registrable securities. Satisfaction and Discharge We may discharge our obligations under the indenture while notes remain outstanding if: (1)all outstanding notes have become due and payable or will become due and payable at their scheduled maturity within 90 days, or (2)all outstanding notes have been called for redemption within 90 days and, in either case, we have deposited with the trustee or paying agent cash in an amount sufficient to pay and discharge all outstanding notes on the date of their scheduled maturity or the scheduled date of redemption. Notwithstanding the satisfaction and discharge of the indenture, specified obligations of the Company shall survive until the notes have been paid in full. Transfer and Exchange We have initially appointed the trustee as security registrar, paying agent and conversion agent acting through its corporate trust office. ChipPAC may require payment of a sum sufficient to cover any tax, assessment or other governmental charge payable in connection with transfers and exchanges. Purchase and Cancellation All notes surrendered for payment, redemption, registration of transfer or exchange or conversion shall, if surrendered to any person other than the trustee, be delivered to the trustee. All notes delivered to the trustee 33 shall be cancelled promptly by the trustee. No notes shall be authenticated in exchange for any notes cancelled as provided in the indenture. Any notes which are purchased or otherwise acquired by us must be surrendered to the trustee for cancellation. Any notes surrendered for cancellation may not be reissued or resold and will be promptly cancelled. Replacement of Notes We will replace mutilated, destroyed, stolen or lost notes upon delivery to the trustee of the mutilated notes, or evidence of the loss, theft or destruction of the notes satisfactory to us and the trustee. In the case of a lost, stolen or destroyed note, indemnity satisfactory to the trustee and us may be required at the expense of the holder of such note before a replacement note will be issued. Governing Law The indenture provides that it and the notes will be governed by, and construed in accordance with, the laws of the State of New York without giving effect to conflicts of laws rules. The Trustee U.S. Bank, N.A. is the trustee under the indenture and will be the registrar and paying agent with regard to the notes. The holders of a majority in principal amount of the outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee, with exceptions provided in the indenture. The trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder of notes, unless the holder shall have offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense and then only to the extent required by the terms of the indenture. Book-Entry, Delivery and Form The notes are currently issued in certificated form in the name of Citicorp Mezzanine III, L.P. Any holder of certificated notes may exchange those certificated notes for an interest in one or more global notes upon delivery of those certificated notes to the registrar in the manner described in the indenture. The following description applies to any interest in a global note. Except as set forth below, the global note may be transferred, in whole and not in part, only to DTC or another nominee of DTC. The holders of notes may hold their beneficial interests in the global note directly through DTC if they have an account with DTC or indirectly through organizations which have accounts with DTC. DTC has advised us that it is: . a limited purpose trust company organized under the laws of the State of New York; . a member of the Federal Reserve System; . a "clearing corporation" within the meaning of the New York Uniform Commercial Code; and . a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. 34 DTC was created to hold securities of institutions that have accounts with DTC (called "participants") and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC's participants include securities brokers and dealers, which may include the initial purchasers of the notes, banks, trust companies, clearing corporations and certain other organizations. Access to DTC's book-entry system is also available to others such as banks, brokers, dealers and trust companies (called "indirect participants") that clear through or maintain a custodial relationship with a participant, whether directly or indirectly. Pursuant to procedures established by DTC, upon the deposit of the global note with DTC, DTC will credit on its book-entry registration and transfer system the principal amount of notes represented by such global note to the accounts of the appropriate participants. Ownership of beneficial interests in the global note is limited to participants or persons that may hold interests through participants. Ownership of beneficial interests in the global note is shown on, and the transfer of those ownership interests may be effected only through, records maintained by DTC (with respect to participants' interests), the participants and the indirect participants. The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. These limits and laws may impair the ability to transfer or pledge beneficial interests in the global note. Beneficial owners of interests in a global note who desire to convert their interests into Class A common stock should contact their brokers or other participants or indirect participants through whom they hold such beneficial interests to obtain information on procedures, including proper forms and cut-off times, for submitting requests for conversion. So long as DTC, or its nominee, is the registered owner or holder of a global note, DTC or its nominee, as the case may be, will be considered the sole owner or holder of the notes represented by the global note for all purposes under the indenture and the notes. In addition, no beneficial owner of an interest in a global note will be able to transfer that interest except in accordance with the applicable procedures of DTC. Except as set forth below, as an owner of a beneficial interest in the global note, you will not be entitled to have the notes represented by the global note registered in your name, will not receive or be entitled to receive physical delivery of certificated notes and will not be considered to be the owner or holder of any notes under the global note. We understand that under existing industry practice, if an owner of a beneficial interest in the global note desires to take any action that DTC, as the holder of the global note, is entitled to take, DTC would authorize the participants to take such action and the participants would authorize beneficial owners owning through such participants to take such action or would otherwise act upon the instructions of beneficial owners owning through them. We will make payments of principal of, premium, if any, and interest (including any additional interest) on the notes represented by the global note registered in the name of and held by DTC or its nominee to DTC or its nominee, as the case may be, as the registered owner and holder of the global note. Neither we, the trustee nor any paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the global note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. We expect that DTC or its nominee, upon receipt of any payment of principal, of premium, if any, or interest (including any additional interest) on the global note, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the global note as shown on the records of DTC or its nominee. We also expect that payments by participants or indirect participants to owners of beneficial interests in the global note held through such participants or indirect participants will be governed by standing instructions and customary practices and will be the responsibility of such participants or indirect participants. We will not have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the global note for any note or for maintaining, 35 supervising or reviewing any records relating to such beneficial ownership interests or for any other aspect of the relationship between DTC and its participants or indirect participants or the relationship between such participants or indirect participants and the owners of beneficial interests in the global note owning through such participants. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds. DTC has advised us that it will take any action permitted to be taken by a holder of notes only at the direction of one or more participants to whose account the DTC interests in the global note is credited and only in respect of such portion of the aggregate principal amount of notes as to which such participant or participants has or have given such direction. However, if DTC notifies us that they are unwilling to be a depository for the global note or ceases to be a clearing agency or there is an event of default under the notes, DTC will exchange the global note for certificated notes which it will distribute to its participants and which will be legended, if required. Although DTC is expected to follow the foregoing procedures in order to facilitate transfers of interests in the global note among participants of DTC, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither we nor the trustee will have any responsibility or liability for the performance by DTC or the participants or indirect participants of their respective obligations under the rules and procedures governing their respective operations. 36 DESCRIPTION OF CAPITAL STOCK General Matters The total amount of our authorized capital stock consists of 250,000,000 shares of Class A common stock, 250,000,000 shares of Class B common stock, 10,000 shares of Class A convertible preferred stock, 105,000 shares of Class B preferred stock, 17,500 shares of Class C preferred stock and 9,867,500 shares of undesignated preferred stock. As of October 31, 2001, we had 69,326,843 shares of Class A common stock and no shares of Class B common stock or of any series of preferred stock outstanding. Also as of October 31, 2001, we had 107 stockholders of record of our Class A common stock. The following summary of provisions of our Class A common stock describes all material provisions of, but does not purport to be complete and is subject to, and qualified in its entirety by, our certificate of incorporation and our by-laws, which are included as exhibits to documents which are incorporated by reference into this prospectus, and by the provisions of applicable law. The certificate of incorporation and by-laws contain provisions that are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and which may have the effect of delaying, deferring or preventing a future takeover or change in control of our company unless the takeover or change in control is approved by our board of directors. Class A Common Stock Subject to the prior rights of the holders of any series of preferred stock, the holders of outstanding shares of Class A common stock are entitled to receive dividends out of assets legally available therefor at that time and in amounts as the board of directors may from time to time determine. Holders of Class A common stock have no preemptive or subscription rights to purchase any of our securities. A holder of Class A common stock will, at its option, be able to convert its shares of Class A common stock into shares of Class B common stock on a share-for-share basis at any time. Upon liquidation, dissolution or winding up of ChipPAC, the holders of Class A common stock are entitled to receive pro rata, together with holders of our Class B common stock, our assets which are legally available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of any series of preferred stock then outstanding. Each outstanding share of Class A common stock is entitled to one vote on all matters submitted to a vote of stockholders. There is no cumulative voting. Except as otherwise required by law or the certificate of incorporation, the holders of Class A common stock and the holders of Class A convertible preferred stock vote together as a single class on all matters submitted to a vote of stockholders. Our Class A common stock is listed on the Nasdaq National Market under the symbol "CHPC." Class B Common Stock We have authorized 250,000,000 shares of class of Class B common stock. The holders of Class B common stock are entitled to the same rights, privileges, benefits and notices as the holders of Class A common stock, except that the holders of Class B common stock are: . not entitled to vote, except as required by law; and . able to convert their shares into Class A common stock on a share-for-share basis at any time. Preferred Stock Our board of directors may, without further action by our stockholders, from time to time, direct the issuance of shares of preferred stock in a series and may, at the time of issuance, determine the rights, preferences and limitations of each series. Satisfaction of any dividend preferences of outstanding shares of preferred stock would reduce the amount of funds available for the payment of dividends on shares of common stock. Holders of shares of preferred stock may be entitled to receive a preference payment in the event of any 37 liquidation, dissolution or winding-up of our company before any payment is made to the holders of shares of common stock. The issuance of shares of preferred stock may render more difficult or tend to discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of our securities or the removal of incumbent management. Upon the affirmative vote of a majority of the total number of directors then in office, the board of directors, without stockholder approval, may issue shares of preferred stock with voting and conversion rights which could adversely affect the holders of shares of common stock. Upon completion of this offering and after the application of the net proceeds from this offering, there will be no shares of preferred stock outstanding. Other Provisions of the Certificate of Incorporation and By-laws The certificate of incorporation provides that stockholder action can be taken only at an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting. The certificate of incorporation and the by-laws provide that, except as otherwise required by law, special meetings of stockholders can only be called through a resolution adopted by a majority of the board of directors or by our chief executive officer. Stockholders will not be permitted to call a special meeting or to require the board to call a special meeting. The by-laws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board. Stockholders at an annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given to our secretary written notice no later than 60 days and no more than 90 days before the meeting, in proper form, of the stockholder's intention to bring that business before the meeting. Although the by-laws do not give the board the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, the by-laws may have the effect of precluding the conduct of business at a meeting if the proper procedures are not followed or may discourage or defer a potential acquiror from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of ChipPAC. Our certificate of incorporation and by-laws provide that the affirmative vote of holders of at least 66 2/3% of the total votes eligible to be cast in the election of directors is required to amend, alter, change or repeal some of their provisions, unless the amendment or change has been approved by a majority of the directors not affiliated or associated with any person or entity holding 20% or more of the voting power of our outstanding capital stock, other than the funds affiliated with Bain Capital and Citicorp Venture Capital, Ltd. and their affiliates. This requirement of a super-majority vote to approve amendments to the certificate of incorporation and by-laws could enable a minority of our stockholders to exercise veto power over any amendments. Provisions of Delaware Law Governing Business Combinations We are not subject to the provisions of Section 203 of the General Corporation Law of Delaware regulating takeovers. Section 203 generally makes it more difficult for a third party to take control of a company by prohibiting a third party owning more than 15% of the company's stock from entering into transactions with the company unless the board of directors or stockholders unaffiliated with the third party approve either the third party or the transaction at issue, before the third party becomes a 15% owner or the third party acquires at least 85% of the company's stock. Limitations on Liability and Indemnification of Officers and Directors The certificate of incorporation limits the liability of directors to the fullest extent permitted by the Delaware General Corporation Law. In addition, the certificate of incorporation provides that we will indemnify 38 our directors and officers to the fullest extent permitted by the Delaware General Corporation Law. We expect to enter into indemnification agreements with our current directors and executive officers prior to the completion of the offering and expect to enter into a similar agreement with any new directors or executive officers. Transfer Agent and Registrar The transfer agent and registrar for our Class A common stock is U.S. Bank, N.A. 39 LEGAL MATTERS Some of the legal matters in connection with the validity of the notes, the underlying Class A common stock and the additional Class A common stock will be passed upon for us by Kirkland & Ellis, Los Angeles, California. Partners of Kirkland & Ellis are partners in Randolph Street Partners, which acquired less than 1.0% of our Class A common stock in connection with the closing of our 1999 recapitalization. Kirkland & Ellis has, from time to time, represented, and may continue to represent, Citicorp Venture Capital, Ltd. and some of its affiliates (including our company and our direct and indirect subsidiaries) in connection with legal matters. EXPERTS The financial statements incorporated in this prospectus by reference to our Annual Report on Form 10-K for the year ended December 31, 2000, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of that firm as experts in auditing and accounting. 40 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the estimated fees and expenses to be incurred in connection with the registration and distribution of the securities being registered hereunder. All such fees and expenses shall be borne by the company. Commission Registration Fee............. $15,686 Legal Fees and Expenses................. $30,000 Accounting Fees and Expenses............ $15,000 Printing, Engraving and Mailing Expenses $10,000 ------- Total................................ $70,686 =======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS ChipPAC, Inc. ChipPAC is incorporated under the laws of the State of Delaware. Section 145 ("Section 145") of the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended (the "General Corporation Law"), inter alia, provides that a Delaware corporation may indemnify any persons who were, are or are threatened to be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amount paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was illegal. A Delaware corporation may indemnify any persons who are, were or are threatened to be made, a party to any threatened, pending or completed action or suit by or in the right of the corporation by reasons of the fact that such person was a director, officer, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees), actually and reasonably incurred by such person in connection with the defense of any action referred to above, the corporation must indemnify him against the expenses which such officer or director has actually and reasonably incurred. Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145. ChipPAC's Certificate of Incorporation and By-laws provide for the indemnification of officers and directors to the fullest extent permitted by the General Corporation Law. 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. II-1 ITEM 16. EXHIBITS.
Number Description - ------ ----------- 2.1. Amended and Restated Agreement and Plan of Merger of ChipPAC, Inc., a California corporation, and ChipPAC, Inc., a Delaware corporation.** 2.2. 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.* 2.3. 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.* 2.4. 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.* 4.1. Purchase Agreement, dated as of June 22, 2001, by and among ChipPAC, Inc. and Citicorp Mezzanine III, L.P.*** 4.2. Indenture, dated as of June 15, 2001, by and among ChipPAC, Inc. and Firstar Bank, N.A., as trustee.*** 4.3. Form of 8% Convertible Subordinated Note Due 2011. 4.4. Registration Rights Agreement, dated June 22, 2001, by and between ChipPAC, Inc. and Citicorp Capital Mezzanine III, L.P.*** 4.5. Specimen certificate for ChipPAC, Inc. Class A common stock.** 4.6. Amended and Restated Registration Agreement, dated as of August 5, 1999, by and among ChipPAC, Inc., the Hyudai Stockholders (as defined therein), the Bain Stockholders (as defined therein), the SXI Stockholders (as defined therein), Intel Corporation, ChipPAC Equity Investors LLC and Sankaty High Yield Asset Partners, L.P.** 4.7. Amendment No. 2 to Amended and Restated Registration Agreement, dated as of July 13, 2000, by and among ChipPAC, Inc., Bain Capital, Inc., QUALCOMM Incorporated, SXI Group LLC and the Bain Shareholders (as defined therein).** 4.8. Class A Common Stock Purchase Agreement, dated as of July 13, 2000, by and between ChipPAC, Inc. and QUALCOMM Incorporated.** 5.1. Opinion of Kirkland & Ellis. 12.1. Statement Regarding Computation of Ratio of Earnings to Fixed Charges. 23.1. Consent of Kirkland & Ellis (included in Exhibit 5.1). 23.2. Consent of PricewaterhouseCoopers LLP. 25.1. Statement of Eligibility on Form T-1 of U.S. Bank, N.A. as trustee, under the Indenture.
- -------- * Incorporated by reference to the Company's registration statement on Form S-4 (No. 333-91641). ** Incorporated by reference to the Company's registration statement on Form S-1 (No. 333-39428). *** Incorporated by reference to the Company's quarterly report on Form 10-Q for the period ended June 30, 2001. II-2 ITEM 17. UNDERTAKINGS The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this regulation statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) 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 end 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 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) 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; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any 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. (3) To remove from the registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) If the registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the state of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided, that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or Rule 3-19 of this chapter if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3. (5) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (6) The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report, to security holders that is II-3 incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. (7) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant 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 registrant will, unless in the opinion of its 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 Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, ChipPAC, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fremont, State of California, on November 19, 2001. CHIPPAC, INC. /s/ DENNIS P. MCKENNA By: _________________________________ Dennis P. McKenna Chairman of the Board, President and Chief Executive Officer * * * * Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the indicated capacities on November 19, 2001. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Dennis P. McKenna, Robert Krakauer and Patricia H. McCall, and each of them, his/her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him/her and in her/her name, place and stead, in any and all capacities, to sign any or all amendments to this registration statement on Form S-3 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Signatures Capacity ---------- -------- /S/ DENNIS P. MCKENNA Chairman of the Board, President and Chief Executive --------------------- Officer (Principal Executive Officer) Dennis P. McKenna /S/ ROBERT KRAKAUER Corporate Controller (Principal Accounting Officer) --------------------- Robert Krakauer /S/ MICHAEL G. POTTER Chief Financial Officer (Principal Financial Officer) --------------------- Michael G. Potter /S/ EDWARD CONRAD Director --------------------- Edward Conrad /S/ MARSHALL HAINES Director --------------------- Marshall Haines II-5 Signatures Capacity ---------- -------- /S/ MICHAEL A. DELANEY Director ---------------------- Michael A. Delaney /S/ PAUL C. SCHORR IV Director ---------------------- Paul C. Schorr IV /S/ JOSEPH MARTIN Director ---------------------- Joseph Martin /S/ CHONG SUP PARK Director ---------------------- Chong Sup Park 6 EXHIBIT INDEX
Number Description - ------ ----------- 2.1 Amended and Restated Agreement and Plan of Merger of ChipPAC, Inc., a California corporation, and ChipPAC, Inc., a Delaware corporation.** 2.2 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.* 2.3 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.* 2.4 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.* 4.1 Purchase Agreement, dated as of June 22, 2001, by and among ChipPAC, Inc. and Citicorp Mezzanine III, L.P.*** 4.2 Indenture, dated as of June 15, 2001, by and among ChipPAC, Inc. and Firstar Bank, N.A., as trustee.*** 4.3 Form of 8% Convertible Subordinated Note Due 2011. 4.4 Registration Rights Agreement, dated June 22, 2001, by and between ChipPAC, Inc. and Citicorp Capital Mezzanine III, L.P.*** 4.5 Specimen certificate for ChipPAC, Inc. Class A common stock.** 4.6 Amended and Restated Registration Agreement, dated as of August 5, 1999, by and among ChipPAC, Inc., the Hyudai Stockholders (as defined therein), the Bain Stockholders (as defined therein), the SXI Stockholders (as defined therein), Intel Corporation, ChipPAC Equity Investors LLC and Sankaty High Yield Asset Partners, L.P.** 4.7 Amendment No. 2 to Amended and Restated Registration Agreement, dated as of July 13, 2000, by and among ChipPAC, Inc., Bain Capital, Inc., QUALCOMM Incorporated, SXI Group LLC and the Bain Shareholders (as defined therein).** 4.8. Class A Common Stock Purchase Agreement, dated as of July 13, 2000, by and between ChipPAC, Inc. and QUALCOMM Incorporated.** 5.1 Opinion of Kirkland & Ellis. 12.1 Statement Regarding Computation of Ratio of Earnings to Fixed Charges. 23.1 Consent of Kirkland & Ellis (included in Exhibit 5.1). 23.2 Consent of PricewaterhouseCoopers LLP. 25.1. Statement of Eligibility on Form T-1 of U.S. Bank, N.A. as trustee, under the Indenture.
- -------- *Incorporated by reference to the Company's registration statement on Form S-4 (No. 333-91641). **Incorporated by reference to the Company's registration statement on Form S-1 (No. 333-39428). ***Incorporated by reference to the Company's quarterly report on Form 10-Q for the period ended June 30, 2001. 1 EX-4.3 3 dex43.txt FORM OF 8% CONVERTIBLE SUBORDINATED NOTES EXHIBIT 4.3 [FORM OF FACE OF SECURITY] [Unless this certificate is presented by an authorized representative of the Depository Trust Company to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of the Depository Trust Company (and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of the depository trust company), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful since the registered owner hereof, Cede & Co., has an interest herein. This security is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a depositary or a nominee thereof. This security is exchangeable for securities registered in the name of a person other than the depositary or its nominee only in the limited circumstances described in the Indenture and, unless and until it is exchanged in whole or in part for securities in definitive form, this security may not be transferred except as a whole by the depositary to a nominee of the depositary or by a nominee of the depositary to the depositary or another nominee of the depositary or by the depositary or any such nominee to a successor depositary or a nominee of such successor depositary.]/1/ [This security (or its predecessor) was originally issued in a transaction exempt from registration under the United States Securities Act of 1933, as amended (the "Securities Act"), and this security and the shares of common stock issuable upon conversion thereof may not be offered, sold or otherwise transferred in the absence of such registration or an applicable exemption therefrom. Each purchaser of this security is hereby notified that the seller of this security may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A thereunder.]/2/ [The holder of this security agrees for the benefit of the company that (a) this security and the shares of common stock issuable upon conversion thereof may be offered, resold, pledged or otherwise transferred, only [(i) in the United States to a person whom the seller reasonably believes is a qualified institutional buyer (as defined in Rule 144A under the Securities Act) in a transaction meeting the requirements of Rule 144A,] (ii) outside the United States in an offshore transaction in accordance with Rule 904 under the Securities Act, (iii) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available) or (iv) pursuant to an effective registration statement under the Securities Act, in each of cases (i) through (iv) in accordance with any applicable securities laws of any state of the United States, and (b) the holder will, and each subsequent holder is required to, notify any purchaser of this security from it of the resale restrictions referred to in (a) above. In any case, the holder hereof - ----------------------- /1/ These paragraphs should be included only if the Security is a Global Security. /2/ These paragraphs to be included only if the Security is a Transfer Restricted Security. 1 will not, directly or indirectly, engage in any hedging transactions with regard to this security except as permitted under the Securities Act.]/2/ [The holder of this security is entitled to the benefits of a Registration Rights Agreement (as such term is defined in the Indenture referred to on the reverse hereof) and, by its acceptance hereof, agrees to be bound by and to comply with the provisions of such Registration Rights Agreement.]/2/ This security may not be sold or transferred to, and each purchaser by its purchase of this security shall be deemed to have represented and covenanted that it is not acquiring this security for or on behalf of, and will not transfer this security to, any pension or welfare plan as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") except that such purchase for or on behalf of a pension or welfare plan shall be permitted: (i) to the extent such purchase is made by or on behalf of a bank collective investment fund maintained by the purchaser in which no plan (together with any other plans maintained by the same employer or employee organization) has an interest in excess of 10% of the total assets in such collective investment fund, and the other applicable conditions of Prohibited Transaction Class Exemption 91-38 issued by the Department of Labor are satisfied; (ii) to the extent such purchase is made by or on behalf of an insurance company pooled separate account maintained by the purchaser in which, at any time while these securities are outstanding, no plan (together with any other plans maintained by the same employer or employee organization) has an interest in excess of 10% of the total of all assets in such pooled separate account, and the other applicable conditions of Prohibited Transaction Class Exemption 90-1 issued by the Department of Labor are satisfied; (iii) to the extent such purchase is made on behalf of a plan by (A) an investment adviser registered under the Investment Advisers Act of 1940, as amended (the "1940 Act"), that had as of the last day of its most recent fiscal year total assets under its management and control in excess of $50.0 million and had stockholders' or partners' equity in excess of $750,000, as shown in its most recent balance sheet prepared in accordance with generally accepted accounting principles, or (B) a bank as defined in Section 202(a)(2) of the 1940 Act with equity capital in excess of $1.0 million as of the last day of its most recent fiscal year, or (C) an insurance company which is qualified under the laws of more than one state to manage, acquire or dispose of any assets of a pension or welfare plan, which insurance company has as of the last day of its most recent fiscal year, net worth in excess of $1.0 million and which is subject to supervision and examination by a State authority having supervision over insurance companies and, in any case, such investment adviser, bank or insurance company is otherwise a qualified professional asset manager, as such term is used in Prohibited Transaction Class Exemption 84-14 issued by the Department of Labor, and the assets of such plan when combined with the assets of other plans established or maintained by the same employer (or affiliate thereof) or employee organization and managed by such investment adviser, bank or insurance company, do not represent more than 20% of the total client assets managed by such investment adviser, bank or insurance company at the time of the transaction, and the other applicable conditions of such exemption are otherwise satisfied; (iv) to the extent such plan is a governmental plan (as defined as Section 3(33) of ERISA) which is not subject to the provisions of Title 1 of ERISA or Section 401 of the Internal Revenue Code of 1986, as amended (the "Code"); 2 (v) to the extent such purchase is made by or on behalf of an insurance company using the assets of its general account, the reserves and liabilities for the general account contracts held by or on behalf of any plan, together with any other plans maintained by the same employer (or its affiliates) or employee organization, do not exceed 10% of the total reserves and liabilities of the insurance company general account (exclusive of separate account liabilities), plus surplus as set forth in the National Association of Insurance Commissioners Annual Statement filed with the state of domicile of the insurer, in accordance with Prohibited Transaction Class Exemption 95-60, and the other applicable conditions of such exemption are otherwise satisfied; (vi) to the extent purchase is made by an in-house asset manager within the meaning of Part IV(a) of Prohibited Transaction Class Exemption 96-23, such manager has made or properly authorized the decision for such plan to purchase this security, under circumstances such that Prohibited Transaction Class Exemption 96-23 is applicable to the purchase and holding of this security; or (vii) to the extent such purchase will not otherwise give rise to a transaction described in Section 406 or Section 4975(c)(1) of the Code for which a statutory or administrative exemption is unavailable. 3 CHIPPAC, INC. CUSIP: ___________ No. ___ 8% CONVERTIBLE SUBORDINATED NOTES DUE JUNE 15, 2011 ChipPAC, Inc., a Delaware corporation (the "Company", which term shall include any successor corporation under the Indenture referred to on the reverse hereof), promises to pay to , or registered assigns, the principal sum of Dollars ($ ) on June 15, 2011 [or such greater or lesser amount as is indicated on the Schedule of Exchanges of Securities on the other side of this Security]/3/ Interest Payment Dates: June 15 and December 15, beginning ____________, 2001 Record Dates: June 1 and December 1 This Security is convertible as specified on the other side of this Security. Additional provisions of this Security are set forth on the other side of this Security. SIGNATURE PAGE FOLLOWS - ----------------------- /3/ This phrase should be included only if the Security is a Global Security. 4 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. CHIPPAC, INC. By: ------------------------------- Name: Title: Attest: By: --------------------------------- Name: Title: Dated: Trustee's Certificate of Authentication: This is one of the Securities referred to in the within-mentioned Indenture. FIRSTAR BANK, N.A., as Trustee - --------------------------------------- Authorized Signatory By: 5 [FORM OF REVERSE SIDE OF SECURITY] CHIPPAC, INC. 8% CONVERTIBLE SUBORDINATED NOTES DUE JUNE 15, 2011 1. Interest -------- ChipPAC, Inc. a Delaware corporation (the "Company", which term shall include any successor corporation under the Indenture hereinafter referred to), promises to pay interest on the principal amount of this Security at the rate of 8% per annum. The Company shall pay interest semiannually on June 15 and December 15 of each year, commencing December 15, 2001. Interest on the Securities shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from June 22, 2001; provided, however, that if there is not an -------- ------- existing Default in the payment of interest and if this Security is authenticated between a record date referred to on the face hereof and the next succeeding interest payment date, interest shall accrue from such interest payment date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Any reference herein to interest accrued or payable as of any date shall include any Additional Interest accrued or payable on such date as provided in the Registration Rights Agreement. 2. Method of Payment ----------------- The Company shall pay interest on this Security (except defaulted interest) to the person who is the Holder of this Security at the close of business on June 1 or December 1, as the case may be, next preceding the related interest payment date. The Holder must surrender this Security to a Paying Agent to collect payment of principal. The Company 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. The Company may, however, pay principal and interest in respect of any Certificated Security by check or wire payable in such money; provided, however, that a Holder with an aggregate principal amount in excess of - -------- ------- $2,000,000 will be paid by wire transfer in immediately available funds at the election of such Holder. The Company may mail an interest check to the Holder's registered address. Notwithstanding the foregoing, so long as this Security is registered in the name of a Depositary or its nominee, all payments hereon shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee. 3. Paying Agent, Registrar and Conversion Agent -------------------------------------------- Initially, Firstar Bank, N.A. (the "Trustee", which term shall include any successor trustee under the Indenture hereinafter referred to) will act as Paying Agent, Registrar, Primary Registrar and Conversion Agent. The Company may change any Paying Agent, Registrar or Conversion Agent without notice to the Holder. The Company or any of its Subsidiaries may, subject to certain limitations set forth in the Indenture, act as Paying Agent or Registrar. 4. Indenture, Limitations ---------------------- 6 This Security is one of a duly authorized issue of Securities of the Company designated as its 8% Convertible Subordinated Notes Due June 15, 2011 (the "Securities"), issued under an Indenture dated as of June 15, 2001 (together with any supplemental indentures thereto, the "Indenture"), between the Company and the Trustee. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of this Security include those stated in the Indenture and those required by or made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended, as in effect on the date of the Indenture. This Security is subject to all such terms, and the Holder of this Security is referred to the Indenture and said Act for a statement of them. The Securities are subordinated unsecured obligations of the Company. Subject to the conditions set forth in Section 2.15 of the Indenture, the Company may issue additional Securities ("Add On Securities"). The Indenture does not limit other debt of the Company, secured or unsecured, including Senior Indebtedness. 5. Provisional and Optional Redemption ----------------------------------- (a) The Company may redeem any portion of the Securities at any time prior to June 15, 2004 (a "Provisional Redemption"), upon giving notice as set forth in Section 6, at a redemption price equal to $1,000 per $1,000 principal amount of the Securities redeemed plus accrued and unpaid interest, if any (such amount, the "Provisional Redemption Price"), to but excluding the date of redemption (the "Provisional Redemption Date") if (1) the Closing Price of the Common Stock has exceeded 150% of the Conversion Price for at least 20 Trading Days within a period of any 30 consecutive Trading Days ending on the Trading Day prior to the date of mailing of the notice of Provisional Redemption (the "Notice Date"), and (2) a shelf registration statement covering resales of the Securities and the Common Stock issuable upon conversion thereof is effective and available for use and is expected to remain effective and available for use for the 30 days following the Provisional Redemption Date unless registration is no longer required. (b) Except as set forth in clause (a) of this Section 5, the Company shall not have the option to redeem the Securities pursuant to this Section 5 prior to June 15, 2004. Thereafter, the Company shall have the option to redeem any portion of the Securities (an "Optional Redemption") upon giving notice as set forth in Section 6. The Optional Redemption Prices (expressed as percentages of the principal amount) are as follows for Securities redeemed during the periods set forth below: Period Redemption Price - ------ ---------------- Beginning on June 15, 2004 and ending on June 14, 2005 104.00% Beginning on June 15, 2005 and ending on June 14, 2006 103.33% Beginning on June 15, 2006 and ending on June 14, 2007 102.67% Beginning on June 15, 2007 and ending on June 14, 2008 102.00% Beginning on June 15, 2008 and ending on June 14, 2009 101.33% Beginning on June 15, 2009 and ending on June 14, 2010 100.67% Beginning on June 15, 2010 and thereafter 100.00% 7 in each case together with accrued interest up to but not including the date of redemption (the "Optional Redemption Date"); provided that if the Optional -------- Redemption Date falls after an interest payment record date and on or before an interest payment date, then the interest payment will be payable to the Holders in whose names the Securities are registered at the close of business on the relevant record date for payment of such interest. 6. Notice of Redemption -------------------- Notice of redemption will be mailed by first-class mail at least 20 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at its registered address. Securities in denominations larger than $1,000 may be redeemed in part, but only in whole multiples of $1,000. On and after the Redemption Date, subject to the deposit with the Paying Agent of funds sufficient to pay the Redemption Price plus accrued interest, if any, accrued to, but excluding, the Redemption Date, interest shall cease to accrue on Securities or portions of them called for redemption. 7. Purchase of Securities at Option of Holder Upon a Change in Control ------------------------------------------------------------------- At the option of the Holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase all or any part specified by the Holder (so long as the principal amount of such part is $1,000 or an integral multiple of $1,000 in excess thereof) of the Securities held by such Holder on the date that is not less than 20 nor more than 30 Business Days after the date on which the Company provides Holders notice of the occurrence of a Change in Control (or, if the Company has not provided such, 40 Business Days following the occurrence of a Change of Control), at a purchase price equal to 100% of the principal amount thereof together with accrued interest up to, but excluding, the Change in Control Purchase Date. The Holder shall have the right to withdraw any Change in Control Purchase Notice (in whole or in a portion thereof that is $1,000 or an integral multiple of $1,000 in excess thereof) at any time prior to the close of business on the Business Day next preceding the Change in Control Purchase Date by delivering a written notice of withdrawal to the Paying Agent in accordance with the terms of the Indenture. 8. Conversion ---------- A Holder of a Security may convert the principal amount of such Security (or any portion thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof) into shares of Common Stock at any time prior to the close of business on June 15, 2011; provided, however, that if the Security is called for -------- ------- redemption or subject to purchase upon a Change in Control, the conversion right will terminate at the close of business on the Business Day immediately preceding the Redemption Date or the Change in Control Purchase Date, as the case may be, for such Security or such earlier date as the Holder presents such Security for redemption or purchase (unless the Company shall default in making the redemption payment or Change in Control Purchase Price, as the case may be, when due, in which case the conversion right shall terminate at the close of business on the date such default is cured and such Security is redeemed or purchased). The initial Conversion Price is $9.96 per share, subject to adjustment under certain circumstances. The number of shares of Common Stock issuable upon conversion of a Security is determined by dividing the principal amount of the Security or portion thereof converted by the Conversion Price in effect on the Conversion Date. No fractional shares will be 8 issued upon conversion; in lieu thereof, an amount will be paid in cash based upon the Closing Price (as defined in the Indenture) of the Common Stock on the Trading Day immediately prior to the Conversion Date. To convert a Security, a Holder must (a) complete and manually sign the conversion notice set forth below and deliver such notice to a Conversion Agent, (b) surrender the Security to a Conversion Agent, (c) furnish appropriate endorsements and transfer documents if required by a Registrar or a Conversion Agent, and (d) pay any transfer or similar tax, if required. Securities so surrendered for conversion (in whole or in part) during the period from the close of business on any regular record date to the opening of business on the next succeeding interest payment date (excluding Securities or portions thereof which are either (i) called for redemption or (ii) subject to purchase following a Change in Control, in either case, on a date during the period beginning at the close of business on a regular record date and ending at the opening of business on the first Business Day after the next succeeding interest payment date, or if such interest payment date is not a Business Day, the second such Business Day) shall also be accompanied by payment in funds acceptable to the Company of an amount equal to the interest payable on such interest payment date on the principal amount of such Security then being converted, and such interest shall be payable to such registered Holder notwithstanding the conversion of such Security, subject to the provisions of this Indenture relating to the payment of defaulted interest by the Company. Except as otherwise provided in this paragraph, no payment or adjustment will be made for accrued interest on a converted Security. If the Company defaults in the payment of interest payable on such interest payment date, the Company shall promptly repay such funds to such Holder. A Holder may convert a portion of a Security equal to $1,000 or any integral multiple thereof. A Security in respect of which a Holder had delivered a Change in Control Purchase Notice exercising the option of such Holder to require the Company to purchase such Security may be converted only if the Change in Control Purchase Notice is withdrawn in accordance with the terms of the Indenture. 9. Conversion Arrangement on Call for Redemption --------------------------------------------- Any Securities called for redemption, unless surrendered for conversion before the close of business on the Business Day immediately preceding the Redemption Date, may be deemed to be purchased from the Holders of such Securities at an amount not less than the Redemption Price, together with accrued interest, if any, to, but not including, the Redemption Date, by one or more investment bankers or other purchasers who may agree with the Company to purchase such Securities from the Holders, to convert them into Common Stock of the Company and to make payment for such Securities to the Paying Agent in trust for such Holders. 10. Subordination ------------- The indebtedness evidenced by the Securities is, to the extent and in the manner provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness of the Company. Any Holder by accepting this Security agrees to and shall be bound by such subordination provisions and authorizes the Trustee to give them effect. In addition to all other rights of Senior Indebtedness described in the Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness and entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any terms of 9 any instrument relating to the Senior Indebtedness or any extension or renewal of the Senior Indebtedness. 11. Denominations, Transfer, Exchange --------------------------------- The Securities are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. A Holder may register the transfer of or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes or other governmental charges that may be imposed in relation thereto by law or permitted by the Indenture. 12. Persons Deemed Owners --------------------- The Holder of a Security may be treated as the owner of it for all purposes. 13. Unclaimed Money --------------- If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its written request. After that, Holders entitled to money must look to the Company for payment. 14. Amendment, Supplement and Waiver -------------------------------- Subject to certain exceptions, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Securities then outstanding, and an existing Default or Event of Default and its consequence or compliance with any provision of the Indenture or the Securities may be waived in a particular instance with the consent of the Holders of a majority in principal amount of the Securities then outstanding. Without the consent of or notice to any Holder, the Company and the Trustee may amend or supplement the Indenture or the Securities to, among other things, cure any ambiguity, defect or inconsistency or make any other change that does not adversely affect the rights of any Holder. 15. Successor Corporation --------------------- When a successor corporation assumes all the obligations of its predecessor under the Securities and the Indenture in accordance with the terms and conditions of the Indenture, the predecessor corporation will (except in certain circumstances specified in the Indenture) be released from those obligations. 16. Defaults and Remedies --------------------- Under the Indenture, an Event of Default includes: (i) default for 30 days in payment of any interest on any Securities; (ii) default in payment of any principal (including, without limitation, any premium, if any) on the Securities when due; (iii) failure by the Company for 60 days after notice to it to comply with any of its other agreements contained in the Indenture or the Securities; (iv) failure by the Company to give notice to the Trustee and Holders of a Change in Control in accordance with the Indenture; and (v) certain events of bankruptcy, insolvency or 10 reorganization of the Company. If an Event of Default (other than as a result of certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities then outstanding may declare all unpaid principal to the date of acceleration on the Securities then outstanding to be due and payable immediately, all as and to the extent provided in the Indenture. If an Event of Default occurs as a result of certain events of bankruptcy, insolvency or reorganization of the Company, unpaid principal of the Securities then outstanding shall become due and payable immediately without any declaration or other act on the part of the Trustee or any Holder, all as and to the extent provided in the Indenture. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in principal amount of the Securities then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in their interests. The Company is required to file periodic reports with the Trustee as to the absence of Default. 17. Trustee Dealings with the Company --------------------------------- Firstar Bank, N.A., the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from and perform services for the Company or an Affiliate of the Company, and may otherwise deal with the Company or an Affiliate of the Company, as if it were not the Trustee. 18. No Recourse Against Others -------------------------- A director, officer, employee or shareholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture nor for any claim based on, in respect of or by reason of such obligations or their creation. The Holder of this Security by accepting this Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of this Security. 19. Authentication ---------------- This Security shall not be valid until the Trustee or an authenticating agent manually signs the certificate of authentication on the other side of this Security. 20. Abbreviations and Definitions ----------------------------- Customary abbreviations may be used in the name of the Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act). All terms defined in the Indenture and used in this Security but not specifically defined herein are defined in the Indenture and are used herein as so defined. 11 21. Indenture to Control; Governing Law ----------------------------------- In the case of any conflict between the provisions of this Security and the Indenture, the provisions of the Indenture shall control. This Security shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of law. The Company will furnish to any Holder, upon written request and without charge, a copy of the Indenture. Requests may be made to: ChipPAC, Inc., 47400 Kato Road, Fremont, CA 94538, Attention: Robert Krakauer. 12 ASSIGNMENT FORM --------------- To assign this Security, fill in the form below: I or we assign and transfer this Security to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint - -------------------------------------------------------------------------------- agent to transfer this Security on the books of the Company. The agent may substitute another to act for him or her. Your Signature: Date: --------------------------------- -------------------------------------- (Sign exactly as your name appears on the other side of this Security) *Signature guaranteed by: By: --------------------------------------- * Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. CONVERSION NOTICE ----------------- To convert this Security into Common Stock of the Company, check the box: [_] To convert only part of this Security, state the principal amount to be converted (must be $1,000 or a multiple of $1,000): $____________. If you want the stock certificate made out in another person's name, fill in the form below: - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) Your Signature: Date: --------------------------------- -------------------------------------- (Sign exactly as your name appears on the other side of this Security) *Signature guaranteed by: By: --------------------------------------- * Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. OPTION TO ELECT REPURCHASE UPON A CHANGE OF CONTROL ------------------------ To: ChipPAC, Inc. The undersigned registered owner of this Security hereby irrevocably acknowledges receipt of a notice from ChipPAC, Inc. (the "Company") as to the occurrence of a Change in Control with respect to the Company and requests and instructs the Company to redeem the entire principal amount of this Security, or the portion thereof (which is $1,000 or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Security at the Change in Control Purchase Price, together with accrued interest to, but excluding, such date, to the registered Holder hereof. Date: ---------------------------------- ------------------------------------- Signature(s) Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. ------------------------------------- Signature Guaranty Principal amount to be redeemed (in an integral multiple of $1,000, if less than all): - ------------------------------------------- NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the face of this Security in every particular, without alteration or any change whatsoever. SCHEDULE OF EXCHANGES OF SECURITIES/4/ ----------------------------------- The following exchanges, redemptions, repurchases or conversions of a part of this global Security have been made:
Principal Amount of this Global Security Following Such Amount of Decrease in Amount of Increase in Decrease Date of Exchange Authorized Signatory of Principal Amount of this Principal Amount of this (or Increase) Securities Custodian Global Security Global Security - ------------------------- ----------------------- ------------------------ ------------------------
- -------- /4/ This schedule should be included only if the Security is a Global Security. CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF TRANSFER RESTRICTED SECURITIES/5/ --------------------------------------------- Re: 8% Convertible Subordinated Securities Due June 15, 2011 (the "Securities") of ChipPAC, Inc. This certificate relates to $_______ principal amount of Securities owned in (check applicable box) [ ] book-entry or [ ] definitive form by ________________ (the "Transferor"). The Transferor has requested a Registrar or the Trustee to exchange or register the transfer of such Securities. In connection with such request and in respect of each such Security, the Transferor does hereby certify that the Transferor is familiar with transfer restrictions relating to the Securities as provided in Section 2.12 of the Indenture, dated as of June 15, 2001, between ChipPAC, Inc. and Firstar Bank, N.A. (the "Indenture"), and the transfer of such Security is being made pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act") (check applicable box) or the transfer or exchange, as the case may be, of such Security does not require registration under the Securities Act because (check applicable box): [ ] Such Security is being transferred pursuant to an effective registration statement under the Securities Act. [ ] Such Security is being acquired for the Transferor's own account, without transfer. [ ] Such Security is being transferred to the Company or a Subsidiary (as defined in the Indenture) of the Company. [ ] Such Security is being transferred to a person the Transferor reasonably believes is a "qualified institutional buyer" (as defined in Rule 144A or any successor provision thereto ("Rule 144A") under the Securities Act) that is purchasing for its own account or for the account of a "qualified institutional buyer", in each case to whom notice has been given that the transfer is being made in reliance on such Rule 144A, and in each case in reliance on Rule 144A. [ ] Such Security is being transferred pursuant to and in compliance with an exemption from the registration requirements under the Securities Act in accordance with Rule 144 (or any successor thereto) ("Rule 144") under the Securities Act. [ ] Such Security is being transferred pursuant to and in compliance with an exemption from the registration requirements of the Securities Act (other than an exemption referred to above) and as a result of which such Security will, upon such transfer, cease to be a "restricted security" within the meaning of Rule 144 under the Securities Act. - -------- /5/ This certificate should only be included if this Security is a Transfer Restricted Security. -2- The Transferor acknowledges and agrees that, if the transferee will hold any such Securities in the form of beneficial interests in a global Security which is a "restricted security" within the meaning of Rule 144 under the Securities Act, then such transfer can only be made pursuant to Rule 144A under the Securities Act and such transferee must be a "qualified institutional buyer" (as defined in Rule 144A). Date: ----------------------------------- ------------------------------------ (Insert Name of Transferor) EX-5.1 4 dex51.txt OPINION OF KIRKLAND & ELLIS EXHIBIT 5.1 KIRKLAND & ELLIS PARTNERSHIPS INCLUDING PROFESSIONAL CORPORATIONS 777 South Figueroa Los Angeles, California 90017 213 680-8400 Facsimile: 213 680-8500 November 19, 2001 ChipPAC, Inc. 47400 Kato Road Fremont, California 94538 Re: ChipPAC, Inc. Registration Statement on Form S-3 ---------------------------------- Ladies and Gentlemen: We are issuing this opinion letter in our capacity as special legal counsel to ChipPAC, Inc., a Delaware corporation (the "Company"), in connection with the proposed registration by the Company of (i) $50,000,000 in aggregate principal amount of the Company's 8% Convertible Subordinated Notes Due 2011 (the "Convertible Notes"), (ii) an indeterminate number of the Company's Class A common stock, par value $0.01 per share, issuable upon conversion of the Convertible Notes (the "Conversion Shares") and (iii) 2,192,982 shares of the Company's Class A common stock, par value $0.01 per share (the "Common Stock"), pursuant to a Registration Statement on Form S-3 filed with the Securities and Exchange Commission (the "Commission") on November 19, 2001, under the Securities Act of 1933, as amended (the "Act") (such Registration Statement, as amended or supplemented, is hereinafter referred to as the "Registration Statement"). The Convertible Notes were issued pursuant to the Indenture (the "Indenture"), dated as of June 15, 2001, by and between the Company and U.S. Bank, N.A., as Trustee. All of the Convertible Notes, the Conversion Shares and the Common Stock to be registered pursuant to the Registration Statement are being offered by the selling security holders named in the Registration Statement. In that connection, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary for the purposes of this opinion, including: (i) Amended and Restated Certificate of Incorporation of the Company; (ii) Amended and Restated Bylaws of the Company; (iii) minutes and records of the corporate proceedings of the Company with respect to the issuance and sale of the Convertible Notes, Conversion Shares and Common Stock; (iv) the Purchase Agreement pursuant to which the Company issued the Convertible Notes; (v) the Indenture; (vi) the form of the Convertible Notes; (vii) the Stock Purchase Agreement pursuant to which the Company issued the Common Stock; (viii) the Registration Rights Agreement pursuant to which the Company is registering the Convertible Notes and the Conversion Shares for the benefit of the selling security holders of the Convertible Notes and the Conversion Shares; (ix) the Registration Rights Agreement pursuant to which the Company is registering the Common Stock for the benefit of the selling security holders of the Common Stock; and (iv) the Registration Statement. KIRKLAND & ELLIS ChipPAC, Inc. November 19, 2001 Page 2 For purposes of this opinion, we have assumed the authenticity of all documents submitted to us as originals, the conformity to the originals of all documents submitted to us as copies and the authenticity of the originals of all documents submitted to us as copies. We have also assumed the genuineness of the signatures of persons signing all documents in connection with which this opinion is rendered, the authority of such persons signing on behalf of the parties thereto other than the Company and the due authorization, execution and delivery of all documents, including the Convertible Notes, the Conversion Shares and the Common Stock, by any applicable parties thereto other than the Company. As to any facts material to the opinions expressed herein which we have not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Company and others. Our opinion expressed below is subject to the qualifications that we express no opinion as to the applicability of, compliance with, or effect of (i) any bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent conveyance, moratorium or other similar law affecting the enforcement of creditors' rights generally, (ii) general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), (iii) public policy considerations which may limit the rights of parties to obtain certain remedies and (iv) any laws except the internal laws of the States of New York and California, the General Corporation Law of the State of Delaware and the federal laws of the United States of America. Based upon and subject to the assumptions, qualifications, exclusions and other limitations contained in this letter, we are of the opinion that (i) the Convertible Notes have been duly authorized, legally issued and constitute valid and legally binding obligations of the Company entitled to the benefits of the Indenture, (ii) the Conversion Shares have been duly authorized and, when issued by the Company upon conversion of the Convertible Notes in accordance with the Indenture, will be validly issued, fully paid and non-assessable and (iii) the Common Stock has been duly authorized and validly issued and are fully paid and non-assessable. We hereby consent to the filing of this opinion with the Commission as Exhibit 5.1 to the Registration Statement. We also consent to the reference to our firm under the heading "Legal Matters" in the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission. This opinion is limited to the specific issues addressed herein, and no opinion may be inferred or implied beyond that expressly stated herein. We assume no obligation to revise or supplement this opinion should the present laws of the States of New York or California or the General Corporation Law of the State of Delaware or the federal law of the United States be changed by legislative action, judicial decision or otherwise. This opinion is furnished to you in connection with the filing of the Registration Statement and is not to be used, circulated, quoted or otherwise relied upon for any other purpose. Sincerely, /s/ Kirkland & Ellis Kirkland & Ellis EX-12.1 5 dex121.txt COMPUTATION OF RATIO OF EARNINGS Exhibit 12.1 ChipPAC, Inc. Computation of Ratio of Earnings to Fixed Charges (in thousands)
Nine Months Ended Years Ended December 31, September 30, ----------------------------------------------------------------------------- 1996 1997 1998 1999 2000 2001 ----------------------------------------------------------------------------- Pre-tax income (loss) from continuing operations $(2,742) $(55,789) $52,867 $(3,997) $18,060 $(37,916) Fixed Charges: Capitalized interest (A) 510 1,122 -- -- -- -- Interest expense 5,780 10,972 13,340 21,241 39,432 27,733 Rentals: Rental expenses (B) 1,667 1,433 2,532 1,633 1,733 2,981 Total fixed charges $7,957 $13,527 $15,872 $22,874 $41,165 $30,714 Pre-tax income (loss) from continuing charges, $5,215 $(42,262) $68,739 $18,877 $59,225 $(7,202) dividend accretion Ratio of earnings to fixed charges (C) (C) 4.3x (C)(D) 1.4x (C)
(A) Capitalized interest relates to the costs of plant and building improvements in China and building improvements in Korea. (B) Amounts represented one-third operating lease rental expense as a reasonable approximation of the interest portion thereof. (C) Due to ChipPAC's losses in the twelve months ended December 31, 1996, 1997, 1999 and the nine months ended September 30, 2001, the ratio coverage was less than 1:1. In order to achieve a coverage ratio of 1:1 for those periods, ChipPAC had to generate additional earnings of $2,742, $55,789, $3,997 and $37,916 respectively. (D) Included in earnings for the year ended December 31, 1999 was a non-recurring loss of $11,842 before income taxes relating to the change of control expenses. If these expenses had not occurred, the ratio of earnings to fixed charges would have been 1.3x. EX-23.2 6 dex232.txt CONSENT OF PRICEWATERHOUSECOOPERS LLP Exhibit 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS ---------------------------------- We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our reports dated January 25, 2001 relating to the financial statements and financial statement schedule, which appear in ChipPAC's Annual Report on Form 10-K for the year ended December 31, 2000. We also consent to the reference to us under the heading "Experts" in such Registration Statement. PricewaterhouseCoopers LLP San Jose, California November 16, 2001 EX-25.1 7 dex251.txt STATEMENT OF ELIGIBILITY ON FORM T-1 EXHIBIT 25.1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2)___ ------------------------------------------------------- U.S. BANK NATIONAL ASSOCIATION (Exact name of Trustee as specified in its charter) 31-0841368 I.R.S. Employer Identification No. 601 Second Avenue South Minneapolis, MN 55402 (Address of principal executive offices) (Zip Code) Julie Eddington U.S. Bank National Association 180 East Fifth Street St. Paul, MN 55101 (Name, address and telephone number of agent for service) CHIPPAC, INC. (Issuer with respect to the Securities) CHIPPAC, INC. (Exact name of Registrant as specified in its charter) Delaware 77-0463048 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 47400 Kato Road Fremont, CA 94538 (Address of Principal Executive Offices) (Zip Code)
Convertible Subordinated Notes (Title of the Indenture Securities) ================================================================================ FORM T-1 -------- Item 1. GENERAL INFORMATION. Furnish the following information as to the Trustee. a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency Washington, D.C. b) Whether it is authorized to exercise corporate trust powers. Yes Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation. None Items 3-15 Items 3-15 are not applicable because to the best of the Trustee's knowledge the obligor is not in default under any Indenture for which the Trustee acts as Trustee. Item 16. LIST OF EXHIBITS: List below all exhibits filed as a part of this statement of eligibility and qualification. 1. A copy of the Articles of Association of the Trustee now in effect, attached as Exhibit 1. 2. A copy of the certificate of authority of the Trustee to commence business, attached as Exhibit 2. 3. A copy of the certificate of authority of the Trustee to exercise corporate trust powers, attached as Exhibit 3. 4. A copy of the existing bylaws of the Trustee, as now in effect, attached as Exhibit 4. 5. A copy of each Indenture referred to in Item 4. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, attached as Exhibit 6. 7. Report of Condition of the Trustee as of June 30, 2001, published pursuant to law or the requirements of its supervising or examining authority, attached as Exhibit 7. 2 NOTE The answers to this statement insofar as such answers relate to what persons have been underwriters for any securities of the obligors within three years prior to the date of filing this statement, or what persons are owners of 10% or more of the voting securities of the obligors, or affiliates, are based upon information furnished to the Trustee by the obligors. While the Trustee has no reason to doubt the accuracy of any such information, it cannot accept any responsibility therefor. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of St. Paul, State of Minnesota on the 9th day of November, 2001. U.S. BANK NATIONAL ASSOCIATION By: /s/ Julie Eddington ------------------------------ Julie Eddington Assistant Vice President By: /s/ Lori-Anne Rosenberg ----------------------------------- Lori-Anne Rosenberg Assistant Vice President 3 Exhibit 1 --------- U.S. BANK NATIONAL ASSOCIATION (FORMERLY NAMED FIRSTAR BANK, NATIONAL ASSOCIATION) CHARTER NO. 24 AMENDED AND RESTATED ARTICLES OF ASSOCIATION ----------------------- These Amended and Restated Articles of Association supersede the Articles of Association of Firstar Bank, National Association, being renamed U.S. Bank National Association (the "Association"), heretofore in effect. FIRST: The title of the Association shall be "U.S. Bank National ------ Association." SECOND: The main office of the Association shall be in the City of ------- Cincinnati, County of Hamilton, State of Ohio. The general business of the Association shall be conducted at its main office and its branches. THIRD: The Board of Directors of the Association shall consist of not ------ less than five (5) nor more than twenty-five (25) shareholders, the exact number of Directors within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the full Board of Directors or by resolution of the shareholders at any annual or special meeting thereof. Unless otherwise provided by the laws of the United States, any vacancy in the Board of Directors for any reason, including an increase in the number thereof, may be filled by action of the Board of Directors. FOURTH: The annual meeting of the shareholders for the election of ------- Directors and the transaction of whatever other business may be brought before said meeting shall be held at the main office or such other place as the Board of Directors may designate, on the day of each year specified thereof by the Bylaws, but if no election is held on that day, it may be held on any subsequent day according to the provisions of law; and all elections shall be held according to the provisions of law; and all elections shall be held according to such lawful regulations as may be prescribed by the Board of Directors. FIFTH: The aggregate number of shares of common stock that the ------ Association has authority to issue is 3,640,000, all of which are of one class only, each such share having a par value of $5.00 (the "Common Stock"). The Association shall also have authority to issue 2,411,935 shares of preferred stock, without par value (the "Preferred Stock"). No holder of shares of the capital stock of any class of the Association shall have any pre-emptive or preferential right of subscription to any shares of any class of stock of the Association, whether now or hereafter authorized, or to any obligations convertible into stock of the Association issued or sold, nor any right of subscription to any thereof other than such, if 4 any, as the Board of Directors, in its discretion, may from time to time determine and at such price as the Board of Directors may from time to time fix. The Association, at any time and from time to time, may authorize and issue debt obligations, whether or not subordinated, without the approval of the shareholders. Section 5.01. Series A Preferred Stock. Pursuant to the provisions of ------------------------ this Article Fifth, a series of Series A Non-Cumulative Preferred Stock, consisting of one hundred sixty-seven thousand (167,000) shares, is hereby established and authorized to be issued, and in addition to such matters specified elsewhere in this Article Fifth, such Series A Non-Cumulative Preferred Stock shall have the following powers, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions: (a) Designation and Amount. The shares of Preferred Stock shall be ---------------------- designated as the Series A Non-Cumulative Preferred Stock (the "Series A Preferred Stock"), and the number of shares constituting the Series A Preferred Stock shall be one hundred sixty-seven thousand (167,000). The liquidation preference of the Series A Preferred Stock shall be $1,000 per share (the "Series A Liquidation Value"). (b) Rank. The Series A Preferred Stock shall, with respect to dividend ---- rights and upon liquidation, dissolution and winding up of the Association, rank (i) senior to all classes and series of Common Stock of the Association and to all classes and series of capital stock of the Association now or hereafter authorized, issued or outstanding, which by their terms expressly provide that they are junior to the Series A Preferred Stock as to dividend distributions and distributions upon the liquidation, dissolution or winding up of the Association, or which do not specify their rank (collectively with the Common Stock, the "Series A Junior Securities"); (ii) on a parity with the Series B Preferred Stock and the Series C Preferred Stock and each other class of capital stock or series of preferred stock issued by the Association after the date hereof, the terms of which specifically provide that such class or series will rank on a parity with the Series A Preferred Stock as to dividend distributions and distributions upon the liquidation, dissolution or winding up of the Association (collectively with the Series B Preferred Stock and the Series C Preferred Stock, the "Series A Parity Securities"); and (iii) junior to each other class of capital stock or series of preferred stock issued by the Association after the date hereof, the terms of which specifically provide that such class or series will rank senior to the Series A Preferred Stock as to dividend distributions and distributions upon the liquidation, dissolution or winding up of the Association (collectively, the "Series A Senior Securities"). (c) Dividends. Dividends are payable on the Series A Preferred Stock --------- as follows: (i) The holders of shares of the Series A Preferred Stock in preference to the Series A Junior Securities shall be entitled to receive, out of funds legally available for that purpose, and when, as, and if declared by the Board of Directors of the Association, dividends payable in cash at the annual rate of eight percent (8%) of the Series A Liquidation Value (the "Series A Dividend Rate"). (ii) Dividends on the Series A Preferred Stock shall be non-cumulative. Dividends not paid on any Series A Dividend Payment Date shall not accumulate thereafter. Dividends shall accumulate from the first day of any Series A Dividend 5 Period to but excluding the immediately succeeding Series A Dividend Payment Date. Dividends, if and when declared, shall be payable in arrears in cash on each Series A Dividend Payment Date of each year with respect to the Series A Dividend Period ending on the day immediately prior to such Series A Dividend Payment Date at the Series A Dividend Rate to holders of record at the close of business on the applicable Record Date, commencing on December 31, 2000 with respect to any shares of Series A Preferred Stock issued prior to that Series A Dividend Payment Date; provided that dividends payable on the Series A Preferred Stock on the Series A Dividend Payment Date immediately following the first Series A Dividend Period following the Issue Date (and any dividend payable for a period less than a full semiannual period) shall be prorated for the period and computed on the basis of a 360-day year of twelve 30-day months and the actual number of days in such Series A Dividend Period; and provided, further, that dividends payable on the Series A Preferred Stock on the Series A Dividend Payment Date immediately following the first Series A Dividend Period following the Issue Date shall include any accumulated and unpaid dividends on the Realty Company Series B Exchangeable Stock exchanged for the Series A Preferred Stock as of the Exchange Date for the then current dividend period. Dividends on such Series A Preferred Stock shall be paid only in cash. (iii) No dividends on shares of Series A Preferred Stock shall be declared by the Board of Directors or paid or set apart for payment by the Board of Directors or paid or set apart for payment by the Association if such declaration or payment shall be restricted or prohibited by law. (iv) Holders of shares of Series A Preferred Stock shall not be entitled to any dividends in excess of full dividends declared, as herein provided, on the shares of Series A Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment on the shares of Series A Preferred Stock that may be in arrears. (v) (A) So long as any shares of Series A Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Series A Junior Securities and other than as provided in clause (B) below) shall be declared, paid or set aside for payment or other distribution upon any Series A Junior Securities or any other Series A Parity Securities, nor shall any shares of any Series A Junior Securities or any other Series A Parity Securities be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or set aside or made available for a sinking fund for the redemption of any shares of any such stock) by the Association (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase, Series A Junior Securities) unless, in each case, the full dividends on all outstanding shares of the Series A Preferred Stock shall have been declared and paid, when due, for the Series A Dividend Period, if any, terminating on or immediately prior to the date of payment in respect of such dividend, distribution, redemption, purchase or acquisition. (B) When dividends for any Series A Dividend Period are not paid in full, as provided in clause (A) above, on the shares of the Series A Preferred Stock or any other Series A Parity Securities, dividends may be declared and paid on any such shares 6 for any dividend period therefor, but only if such dividends are declared and paid pro rata so that the amount of dividends declared and paid per share on the shares of the Series A Preferred Stock and any other Series A Parity Securities, in all cases shall bear to each other the same ratio that the amount of unpaid dividends per share on the shares of the Series A Preferred Stock for such Series A Dividend Period and such other Series A Parity Securities for the corresponding dividend period bear to each other. (d) Liquidation Preference. ---------------------- (i) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Association, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Association available for distribution to its shareholders an amount in cash equal to the Series A Liquidation Value for each share outstanding, plus an amount in cash equal to all unpaid dividends thereon for the then current Series A Dividend Period, whether or not earned or declared, before any payment shall be made or any assets distributed to the holders of Series A Junior Securities. If the assets of the Association are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of the Series A Preferred Stock and any Series A Parity Securities, then the holders of all such shares shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Series A Preferred Stock and the holders of outstanding shares of such Series A Parity Securities are entitled were paid in full. (ii) For the purpose of this Section 5.01(d), neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Association, nor the consolidation or merger of the Association, shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Association, unless such voluntary sale, conveyance, exchange or transfer shall be in connection with a plan of liquidation, dissolution or winding up of the Association. (e) Redemption. The Series A Preferred Stock is not redeemable ---------- prior to December 31, 2021. On or after such date, the Series A Preferred Stock shall be redeemable, in whole or in part, at the option of the Association, but with the consent of the Comptroller of the Currency and any other appropriate regulatory authorities, if required, for cash out of any source of funds legally available, at a redemption price equal to 100% of the Series A Liquidation Value per share plus unpaid dividends thereon accumulated since the immediately preceding Series A Dividend Payment Date (the "Series A Redemption Price"). Any date of such redemption is referred to as the "Series A Redemption Date." If fewer than all the outstanding shares of Series A Preferred Stock are to be redeemed, the Association will select those to be redeemed by lot or pro rata or by any other method as may be determined by the Board of Directors to be equitable. The Series A Preferred Stock is not subject to any sinking fund. (f) Procedure for Redemption. ------------------------ (i) Upon redemption of the Series A Preferred Stock pursuant to Section 5.01(e) hereof, notice of such redemption (a "Series A Notice of Redemption") shall be 7 mailed by first-class mail, postage prepaid, not less than thirty (30) days nor more than sixty (60) days prior to the Series A Redemption Date to the holders of record of the shares to be redeemed at their respective addresses as they shall appear in the records of the Association; provided, however, that failure to give such notice or any defect therein or in the mailing thereof shall not affect the validity of the proceeding for the redemption of any shares so to be redeemed except as to the holder to whom the Association has failed to give such notice or except as to the holder to whom notice was defective. Each such notice shall state: (A) the Series A Redemption Date; (B) the Series A Redemption Price; (C) the place or places where certificates for such shares are to be surrendered for payment of the Series A Redemption Price; and (D) the CUSIP number of the shares being redeemed. (ii) If a Series A Notice of Redemption shall have been given as aforesaid and the Association shall have deposited on or before the Series A Redemption Date a sum sufficient to redeem the shares of Series A Preferred Stock as to which a Series A Notice of Redemption has been given in trust with the Transfer Agent with irrevocable instructions and authority to pay the Series A Redemption Price to the holders thereof, or if no such deposit is made, then upon the Series A Redemption Date (unless the Association shall default in making payment of the Series A Redemption Price), all rights of the holders thereof as shareholders of the Association by reason of the ownership of such shares (except their right to receive the Series A Redemption Price thereof without interest) shall cease and terminate, and such shares shall no longer be deemed outstanding for any purpose. The Association shall be entitled to receive, from time to time, from the Transfer Agent the interest, if any, earned on such moneys deposited with it, and the holders of any shares so redeemed shall have no claim to any such interest. In case the holder of any shares of Series A Preferred Stock so called for redemption shall not claim the Series A Redemption Price for its shares within twelve (12) months after the related Series A Redemption Date, the Transfer Agent shall, upon demand, pay over to the Association such amount remaining on deposit, and the Transfer Agent shall thereupon be relieved of all responsibility to the holder of such shares, and such holder shall look only to the Association for payment thereof. (iii) Not later than 1:30 p.m., Eastern Standard Time, on the Business Day immediately preceding the Series A Redemption Date, the Association shall irrevocably deposit with the Transfer Agent sufficient funds for the payment of the Series A Redemption Price for the shares to be redeemed on the Series A Redemption Date and shall give the Transfer Agent irrevocable instructions to apply such funds, and, if applicable and so specified in the instructions, the income and proceeds therefrom, to the payment of such Series A Redemption Price. The Association may direct the Transfer Agent to invest any such available funds, provided that the proceeds of any such investment will be available to the Transfer Agent in Milwaukee, Wisconsin at the opening of business on such Series A Redemption Date. (iv) Except as otherwise expressly set forth in this Section 5.01(f), nothing contained in these Amended and Restated Articles of Association shall limit any legal right of the Association to purchase or otherwise acquire any shares of Series A Preferred Stock at any price, whether higher or lower than the Series A Redemption Price, in private negotiated transactions, the over-the-counter market or otherwise. 8 (v) If the Association shall not have funds legally available for the redemption of all of the shares of Series A Preferred Stock on any Series A Redemption Date, the Association shall redeem on the Series A Redemption Date only the number of shares of Series A Preferred Stock as it shall have legally available funds to redeem, as determined in an equitable manner, and the remainder of the shares of Series A Preferred Stock shall be redeemed, at the option of the Association, on the earliest practicable date next following the day on which the Association shall first have funds legally available for the redemption of such shares. (g) Reacquired Shares. Shares of the Series A Preferred Stock that ----------------- have been redeemed, purchased or otherwise acquired by the Association are not subject to reissuance or resale as shares of Series A Preferred Stock and shall be held in treasury. Such shares shall revert to the status of authorized but unissued shares of preferred stock, undesignated as to series, until the Board of Directors of the Association shall designate them again for issuance as part of a series. (h) Voting Rights. Except as otherwise required by applicable -------------- law, the holders of Series A Preferred Stock shall not have any voting rights. SECTION 5.02. SERIES B PREFERRED STOCK. PURSUANT TO THE PROVISIONS OF THIS ARTICLE FIFTH, A SERIES OF SERIES B NON-CUMULATIVE PREFERRED STOCK, CONSISTING OF ONE MILLION FOUR HUNDRED NINETY-FOUR THOUSAND NINE HUNDRED THIRTY-FIVE (1,494,935) SHARES, IS HEREBY ESTABLISHED AND AUTHORIZED TO BE ISSUED, AND IN ADDITION TO SUCH MATTERS SPECIFIED ELSEWHERE IN THIS ARTICLE FIFTH, SUCH SERIES B NON-CUMULATIVE PREFERRED STOCK SHALL HAVE THE FOLLOWING POWERS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS: (a) Designation and Amount. The shares of Preferred Stock shall be ---------------------- designated as the Series B Non-Cumulative Preferred Stock (the "Series B Preferred Stock"), and the number of shares constituting the Series B Preferred Stock shall be one million four hundred ninety-four thousand nine hundred thirty-five (1,494,935). The liquidation preference of the Series B Preferred Stock shall be $1,000 per share (the "Series B Liquidation Value"). (b) Rank. The Series B Preferred Stock shall, with respect to ---- dividend rights and upon liquidation, dissolution and winding up of the Association, rank (i) senior to all classes and series of Common Stock of the Association and to all classes and series of capital stock of the Association now or hereafter authorized, issued or outstanding, which by their terms expressly provide that they are junior to the Series B Preferred Stock as to dividend distributions and distributions upon the liquidation, dissolution or winding up of the Association, or which do not specify their rank (collectively with the Common Stock, the "Series B Junior Securities"); (ii) on a parity with the Series A Preferred Stock and the Series C Preferred Stock and each other class of capital stock or series of preferred stock issued by the Association after the date hereof, the terms of which specifically provide that such class or series will rank on a parity with the Series 9 B Preferred Stock as to dividend distributions and distributions upon the liquidation, dissolution or winding up of the Association (collectively with the Series A Preferred Stock and the Series C Preferred Stock, the "Series B Parity Securities"); and (iii) junior to each other class of capital stock or series of preferred stock issued by the Association after the date hereof, the terms of which specifically provide that such class or series will rank senior to the Series B Preferred Stock as to dividend distributions and distributions upon the liquidation, dissolution or winding up of the Association (collectively, the "Series B Senior Securities"). (c) Dividends. Dividends are payable on the Series B Preferred --------- Stock as follows: (i) The holders of the Series B Preferred Stock in preference to the Series B Junior Securities shall be entitled to receive, out of funds legally available for that purpose, and when, as, and if declared by the Board of Directors of the Association, dividends payable in cash at the applicable annual rate set forth in this Section 5.02(c)(i) below of the Series B Liquidation Value (the "Series B Dividend Rate"): (1) With respect to dividends payable on each Series B Dividend Payment Date occurring from the Issue Date through December 31, 2005, the Series B Dividend Rate shall be eight and seven-eighths percent (8.875%); and (2) Thereafter, dividends shall accrue at a variable rate per annum equal to the 5-year CMT Rate plus two percent (2%). On December 31, 2005, and on December 31 every five (5) years thereafter, the previous dividend rate shall be replaced by the then-current 5-year CMT Rate plus two percent (2%). The 5-year CMT Rate for each 5-year period shall be determined by the Calculation Agent on the second Business Day immediately preceding the first day of such period (each a "CMT Determination Date"). (ii) Dividends on the Series B Preferred Stock shall be non-cumulative. Dividends not paid on any Series B Dividend Payment Date shall not accumulate thereafter. Dividends shall accumulate from the first day of any Series A Dividend Period to but excluding the immediately succeeding Series A Dividend Payment Date. Dividends, if and when declared, shall be payable in arrears in cash on each Series B Dividend Payment Date of each year with respect to the Series B Dividend Period ending on the day immediately prior to such Series B Dividend Payment Date at the Series B Dividend Rate per share to holders of record at the close of business on the applicable Record Date, commencing on the Exchange Date with respect to any shares of Series B Preferred Stock issued prior to that Series B Dividend Payment Date; provided that dividends payable on the Series B Preferred Stock on the Series B Dividend Payment Date immediately following the first Series B Dividend Period following the Issue Date (and any dividend payable for a period less than a full quarterly period) shall be prorated for the period and computed on the basis of a 360-day year of twelve 30-day months and the actual number of days in such Series B Dividend Period; and provided, further, that dividends payable on the Series B Preferred Stock on the Series B Dividend Payment Date immediately following the first Series B Dividend Period following the Issue Date 10 shall include any accumulated and unpaid dividends on the Realty Company Series C Exchangeable Stock exchanged for the Series B Preferred Stock as of the Exchange Date for the then current dividend period. Dividends on such Series B Preferred Stock shall be paid only in cash. (iii) No dividends on shares of Series B Preferred Stock shall be declared by the Board of Directors or paid or set apart for payment by the Board of Directors or paid or set apart for payment by the Association if such declaration or payment shall be restricted or prohibited by law. (iv) Holders of shares of Series B Preferred Stock shall not be entitled to any dividends in excess of full dividends declared, as herein provided, on the shares of Series B Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment on the shares of Series B Preferred Stock that may be in arrears. (v) (A) So long as any shares of Series B Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Series B Junior Securities and other than as provided in clause (B) below) shall be declared, paid or set aside for payment or other distribution upon any Series B Junior Securities or any other Series B Parity Securities, nor shall any shares of any Series B Junior Securities or any other Series B Parity Securities be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or set aside or made available for a sinking fund for the redemption of any shares of any such stock) by the Association (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase, Series B Junior Securities) unless, in each case, the full dividends on all outstanding shares of the Series B Preferred Stock shall have been declared and paid, when due, for the Series B Dividend Period, if any, terminating on or immediately prior to the date of payment in respect of such dividend, distribution, redemption, purchase or acquisition. (B) When dividends for any Series B Dividend Period are not paid in full, as provided in clause (A) above, on the shares of the Series B Preferred Stock or any other Series B Parity Securities, dividends may be declared and paid on any such shares for any dividend period therefor, but only if such dividends are declared and paid pro rata so that the amount of dividends declared and paid per share on the shares of the Series B Preferred Stock and any other Series B Parity Securities, in all cases shall bear to each other the same ratio that the amount of unpaid dividends per share on the shares of the Series B Preferred Stock for such Series B Dividend Period and such other Series B Parity Securities for the corresponding dividend period bear to each other. (d) Liquidation Preference. ---------------------- (i) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Association, the holders of shares of Series B Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Association available for distribution to its shareholders an amount in cash equal to the Series B Liquidation Value for each share outstanding, plus an amount in cash equal to all unpaid 11 dividends thereon for the then current Series B Dividend Period, whether or not earned or declared, before any payment shall be made or any assets distributed to the holders of Series B Junior Securities. If the assets of the Association are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of the Series B Preferred Stock and any Series B Parity Securities, then the holders of all such shares shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Series B Preferred Stock and the holders of outstanding shares of such Series B Parity Securities are entitled were paid in full. (ii) For the purpose of this Section 5.02(d), neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Association, nor the consolidation or merger of the Association, shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Association, unless such voluntary sale, conveyance, exchange or transfer shall be in connection with a plan of liquidation, dissolution or winding up of the Association. (e) Redemption. The Series B Preferred Stock is not redeemable prior to ---------- December 31, 2005. On such date and on each fifth anniversary of such date, the Series B Preferred Stock shall be redeemable, in whole or in part, at the option of the Association, but with the consent of the Comptroller of the Currency and any other appropriate regulatory authorities, if required, for cash out of any source of funds legally available, at a redemption price equal to 100% of the Series B Liquidation Value per share plus unpaid dividends thereon accumulated since the immediately preceding Series B Dividend Payment Date (the "Series B Redemption Price"). Any date of such redemption is referred to as the "Series B Redemption Date." If fewer than all the outstanding shares of Series B Preferred Stock are to be redeemed, the Association will select those to be redeemed by lot or pro rata or by any other method as may be determined by the Board of Directors to be equitable. The Series B Preferred Stock is not subject to any sinking fund. (f) Procedure for Redemption. ------------------------ (i) Upon redemption of the Series B Preferred Stock pursuant to Section 5.02(e) hereof, notice of such redemption (a "Series B Notice of Redemption") shall be mailed by first-class mail, postage prepaid, not less than thirty (30) days nor more than sixty (60) days prior to the Series B Redemption Date to the holders of record of the shares to be redeemed at their respective addresses as they shall appear in the records of the Association; provided, however, that failure to give such notice or any defect therein or in the mailing thereof shall not affect the validity of the proceeding for the redemption of any shares so to be redeemed except as to the holder to whom the Association has failed to give such notice or except as to the holder to whom notice was defective. Each such notice shall state: (A) the Series B Redemption Date; (B) the Series B Redemption Price; (C) the place or places where certificates for such shares are to be surrendered for payment of the Series B Redemption Price; and (D) the CUSIP number of the shares being redeemed. 12 (ii) If a Series B Notice of Redemption shall have been given as aforesaid and the Association shall have deposited on or before the Series B Redemption Date a sum sufficient to redeem the shares of Series B Preferred Stock as to which a Series B Notice of Redemption has been given in trust with the Transfer Agent with irrevocable instructions and authority to pay the Series B Redemption Price to the holders thereof, or if no such deposit is made, then upon the Series B Redemption Date (unless the Association shall default in making payment of the Series B Redemption Price), all rights of the holders thereof as shareholders of the Association by reason of the ownership of such shares (except their right to receive the Series B Redemption Price thereof without interest) shall cease and terminate, and such shares shall no longer be deemed outstanding for any purpose. The Association shall be entitled to receive, from time to time, from the Transfer Agent the interest, if any, earned on such moneys deposited with it, and the holders of any shares so redeemed shall have no claim to any such interest. In case the holder of any shares of Series B Preferred Stock so called for redemption shall not claim the Series B Redemption Price for its shares within twelve (12) months after the related Series B Redemption Date, the Transfer Agent shall, upon demand, pay over to the Association such amount remaining on deposit, and the Transfer Agent shall thereupon be relieved of all responsibility to the holder of such shares, and such holder shall look only to the Association for payment thereof. (iii) Not later than 1:30 p.m., Eastern Standard Time, on the Business Day immediately preceding the Series B Redemption Date, the Association shall irrevocably deposit with the Transfer Agent sufficient funds for the payment of the Series B Redemption Price for the shares to be redeemed on the Series B Redemption Date and shall give the Transfer Agent irrevocable instructions to apply such funds, and, if applicable and so specified in the instructions, the income and proceeds therefrom, to the payment of such Series B Redemption Price. The Association may direct the Transfer Agent to invest any such available funds, provided that the proceeds of any such investment will be available to the Transfer Agent in Milwaukee, Wisconsin at the opening of business on such Series B Redemption Date. (iv) Except as otherwise expressly set forth in this Section 5.02(f), nothing contained in these Amended and Restated Articles of Association shall limit any legal right of the Association to purchase or otherwise acquire any shares of Series B Preferred Stock at any price, whether higher or lower than the Series B Redemption Price, in private negotiated transactions, the over-the-counter market or otherwise. (v) If the Association shall not have funds legally available for the redemption of all of the shares of Series B Preferred Stock on any Series B Redemption Date, the Association shall redeem on the Series B Redemption Date only the number of shares of Series B Preferred Stock as it shall have legally available funds to redeem, as determined in an equitable manner, and the remainder of the shares of Series B Preferred Stock shall be redeemed, at the option of the Association, on the earliest practicable date next following the day on which the Association shall first have funds legally available for the redemption of such shares. 13 (g) Reacquired Shares. Shares of the Series B Preferred Stock that have ----------------- been redeemed, purchased or otherwise acquired by the Association are not subject to reissuance or resale as shares of Series B Preferred Stock and shall be held in treasury. Such shares shall revert to the status of authorized but unissued shares of preferred stock, undesignated as to series, until the Board of Directors of the Association shall designate them again for issuance as part of a series. (h) Voting Rights. Except as otherwise required by applicable law, the ------------- holders of Series B Preferred Stock shall not have any voting rights. SECTION 5.03. SERIES C PREFERRED STOCK. PURSUANT TO THE PROVISIONS OF THIS ARTICLE FIFTH, A SERIES OF SERIES C NON-CUMULATIVE PREFERRED STOCK, CONSISTING OF SEVEN HUNDRED FIFTY THOUSAND (750,000) SHARES, IS HEREBY ESTABLISHED AND AUTHORIZED TO BE ISSUED, AND IN ADDITION TO SUCH MATTERS SPECIFIED ELSEWHERE IN THIS ARTICLE FIFTH, SUCH SERIES C NON-CUMULATIVE PREFERRED STOCK SHALL HAVE THE FOLLOWING POWERS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS: (a) Designation and Amount. The shares of Preferred Stock shall be ---------------------- designated as the Series C Non-Cumulative Preferred Stock (the "Series C Preferred Stock"), and the number of shares constituting the Series C Preferred Stock shall be seven hundred fifty thousand (750,000). The liquidation preference of the Series C Preferred Stock shall be $1,000 per share (the "Series C Liquidation Value"). (b) Rank. The Series C Preferred Stock shall, with respect to dividend ---- rights and upon liquidation, dissolution and winding up of the Association, rank (i) senior to all classes and series of Common Stock of the Association and to all classes and series of capital stock of the Association now or hereafter authorized, issued or outstanding, which by their terms expressly provide that they are junior to the Series C Preferred Stock as to dividend distributions and distributions upon the liquidation, dissolution or winding up of the Association, or which do not specify their rank (collectively with the Common Stock, the "Series C Junior Securities"); (ii) on a parity with the Series A Preferred Stock and the Series B Preferred Stock and each other class of capital stock or series of preferred stock issued by the Association after the date hereof, the terms of which specifically provide that such class or series will rank on a parity with the Series C Preferred Stock as to dividend distributions and distributions upon the liquidation, dissolution or winding up of the Association (collectively with the Series A Preferred Stock and the Series B Preferred Stock, the "Series C Parity Securities"); and (iii) junior to each other class of capital stock or series of preferred stock issued by the Association after the date hereof, the terms of which specifically provide that such class or series will rank senior to the Series C Preferred Stock as to dividend distributions and distributions upon the liquidation, dissolution or winding up of the Association (collectively, the "Series C Senior Securities"). (c) Dividends. Dividends are payable on the Series C Preferred Stock as --------- follows: 14 (i) The holders of the Series C Preferred Stock in preference to the Series C Junior Securities shall be entitled to receive, out of funds legally available for that purpose, and when, as, and if declared by the Board of Directors of the Association, dividends payable in cash at the annual rate of 7.75% of the Series C Liquidation Value (the "Series C Dividend Rate"). (ii) Dividends on the Series C Preferred Stock shall be non-cumulative. Dividends not paid on any Series C Dividend Payment Date shall not accumulate thereafter. Dividends shall accumulate from the first day of any Series C Dividend Period to but excluding the immediately succeeding Series C Dividend Payment Date. Dividends, if and when declared, shall be payable in arrears in cash on each Series C Dividend Payment Date of each year with respect to the Series C Dividend Period ending on the day immediately prior to such Series C Dividend Payment Date at the Series C Dividend Rate per share to holders of record at the close of business on the applicable Record Date, commencing on the Exchange Date with respect to any shares of Series C Preferred Stock issued prior to that Series C Dividend Payment Date; provided that dividends payable on the Series C Preferred Stock on the Series C Dividend Payment Date immediately following the first Series C Dividend Period following the Issue Date (and any dividend payable for a period less than a full quarterly period) shall be prorated for the period and computed on the basis of a 360-day year of twelve 30-day months and the actual number of days in such Series C Dividend Period; and provided, further, that dividends payable on the Series C Preferred Stock on the Series C Dividend Payment Date immediately following the first Series C Dividend Period following the Issue Date shall include any accumulated and unpaid dividends on the Funding Company Exchangeable Securities exchanged for the Series C Preferred Stock as of the Exchange Date for the then current dividend period. Dividends on such Series C Preferred Stock shall be paid only in cash. (iii) No dividends on shares of Series C Preferred Stock shall be declared by the Board of Directors or paid or set apart for payment by the Board of Directors or paid or set apart for payment by the Association if such declaration or payment shall be restricted or prohibited by law. (iv) Holders of shares of Series C Preferred Stock shall not be entitled to any dividends in excess of full dividends declared, as herein provided, on the shares of Series C Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment on the shares of Series C Preferred Stock that may be in arrears. (v) (A) So long as any shares of Series C Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Series C Junior Securities and other than as provided in clause (B) below) shall be declared, paid or set aside for payment or other distribution upon any Series C Junior Securities or any other Series C Parity Securities, nor shall any shares of any Series C Junior Securities or any other Series C Parity Securities be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or set aside or made available for a sinking fund for the redemption of any shares of any such stock) by the Association (except by conversion into or exchange 15 for shares of, or options, warrants or rights to subscribe for or purchase, Series C Junior Securities) unless, in each case, the full dividends on all outstanding shares of the Series C Preferred Stock shall have been declared and paid, when due, for the Series C Dividend Period, if any, terminating on or immediately prior to the date of payment in respect of such dividend, distribution, redemption, purchase or acquisition. (B) When dividends for any Series C Dividend Period are not paid in full, as provided in clause (A) above, on the shares of the Series C Preferred Stock or any other Series C Parity Securities, dividends may be declared and paid on any such shares for any dividend period therefor, but only if such dividends are declared and paid pro rata so that the amount of dividends declared and paid per share on the shares of the Series C Preferred Stock and any other Series C Parity Securities, in all cases shall bear to each other the same ratio that the amount of unpaid dividends per share on the shares of the Series C Preferred Stock for such Series C Dividend Period and such other Series C Parity Securities for the corresponding dividend period bear to each other. (d) Liquidation Preference. ---------------------- (i) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Association, the holders of shares of Series C Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Association available for distribution to its shareholders an amount in cash equal to the Series C Liquidation Value for each share outstanding, plus an amount in cash equal to all unpaid dividends thereon for the then current Series C Dividend Period, whether or not earned or declared, before any payment shall be made or any assets distributed to the holders of Series C Junior Securities. If the assets of the Association are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of the Series C Preferred Stock and any Series C Parity Securities, then the holders of all such shares shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Series C Preferred Stock and the holders of outstanding shares of such Series C Parity Securities are entitled were paid in full. (ii) For the purpose of this Section 5.03(d), neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Association, nor the consolidation or merger of the Association, shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Association, unless such voluntary sale, conveyance, exchange or transfer shall be in connection with a plan of liquidation, dissolution or winding up of the Association. (e) Redemption. The Series C Preferred Stock shall be redeemable at any ---------- time, in whole or in part, at the option of the Association, but with the consent of the Comptroller of the Currency and any other appropriate regulatory authorities, if required, for cash out of any source of funds legally available, at a redemption price equal to 100% of the Series C Liquidation Value per share plus unpaid dividends thereon accumulated since the immediately preceding Series C Dividend Payment Date (the "Series C Redemption Price"). Any date of such redemption is referred to as the "Series C Redemption Date." If fewer than all the outstanding shares of Series 16 C Preferred Stock are to be redeemed, the Association will select those to be redeemed by lot or pro rata or by any other method as may be determined by the Board of Directors to be equitable. The Series C Preferred Stock is not subject to any sinking fund. (f) Procedure for Redemption. ------------------------ (i) Upon redemption of the Series C Preferred Stock pursuant to Section 5.03(e) hereof, notice of such redemption (a "Series C Notice of Redemption") shall be mailed by first-class mail, postage prepaid, not less than thirty (30) days nor more than sixty (60) days prior to the Series C Redemption Date to the holders of record of the shares to be redeemed at their respective addresses as they shall appear in the records of the Association; provided, however, that failure to give such notice or any defect therein or in the mailing thereof shall not affect the validity of the proceeding for the redemption of any shares so to be redeemed except as to the holder to whom the Association has failed to give such notice or except as to the holder to whom notice was defective. Each such notice shall state: (A) the Series C Redemption Date; (B) the Series C Redemption Price; (C) the place or places where certificates for such shares are to be surrendered for payment of the Series C Redemption Price; and (D) the CUSIP number of the shares being redeemed. (ii) If a Series C Notice of Redemption shall have been given as aforesaid and the Association shall have deposited on or before the Series C Redemption Date a sum sufficient to redeem the shares of Series C Preferred Stock as to which a Series C Notice of Redemption has been given in trust with the Transfer Agent with irrevocable instructions and authority to pay the Series C Redemption Price to the holders thereof, or if no such deposit is made, then upon the Series C Redemption Date (unless the Association shall default in making payment of the Series C Redemption Price), all rights of the holders thereof as shareholders of the Association by reason of the ownership of such shares (except their right to receive the Series C Redemption Price thereof without interest) shall cease and terminate, and such shares shall no longer be deemed outstanding for any purpose. The Association shall be entitled to receive, from time to time, from the Transfer Agent the interest, if any, earned on such moneys deposited with it, and the holders of any shares so redeemed shall have no claim to any such interest. In case the holder of any shares of Series C Preferred Stock so called for redemption shall not claim the Series C Redemption Price for its shares within twelve (12) months after the related Series C Redemption Date, the Transfer Agent shall, upon demand, pay over to the Association such amount remaining on deposit, and the Transfer Agent shall thereupon be relieved of all responsibility to the holder of such shares, and such holder shall look only to the Association for payment thereof. (iii) Not later than 1:30 p.m., Eastern Standard Time, on the Business Day immediately preceding the Series C Redemption Date, the Association shall irrevocably deposit with the Transfer Agent sufficient funds for the payment of the Series C Redemption Price for the shares to be redeemed on the Series C Redemption Date and shall give the Transfer Agent irrevocable instructions to apply such funds, and, if applicable and so specified in the instructions, the income and proceeds therefrom, to the payment of such Series C Redemption Price. The Association may direct the Transfer 17 Agent to invest any such available funds, provided that the proceeds of any such investment will be available to the Transfer Agent in Milwaukee, Wisconsin at the opening of business on such Series C Redemption Date. (iv) Except as otherwise expressly set forth in this Section 5.03(f), nothing contained in these Amended and Restated Articles of Association shall limit any legal right of the Association to purchase or otherwise acquire any shares of Series C Preferred Stock at any price, whether higher or lower than the Series C Redemption Price, in private negotiated transactions, the over-the-counter market or otherwise. (v) If the Association shall not have funds legally available for the redemption of all of the shares of Series C Preferred Stock on any Series C Redemption Date, the Association shall redeem on the Series C Redemption Date only the number of shares of Series C Preferred Stock as it shall have legally available funds to redeem, as determined in an equitable manner, and the remainder of the shares of Series C Preferred Stock shall be redeemed, at the option of the Association, on the earliest practicable date next following the day on which the Association shall first have funds legally available for the redemption of such shares. (g) Reacquired Shares. Shares of the Series C Preferred Stock that have ----------------- been redeemed, purchased or otherwise acquired by the Association are not subject to reissuance or resale as shares of Series C Preferred Stock and shall be held in treasury. Such shares shall revert to the status of authorized but unissued shares of preferred stock, undesignated as to series, until the Board of Directors of the Association shall designate them again for issuance as part of a series. (h) Voting Rights. Except as otherwise required by applicable law, the ------------- holders of Series C Preferred Stock shall not have any voting rights. SECTION 5.04. DEFINITIONS. FOR THE PURPOSE OF SECTIONS 5.01, 5.02 AND 5.03 HEREOF, THE FOLLOWING TERMS SHALL HAVE THE MEANINGS INDICATED: "5-year CMT Rate" for any CMT Determination Date will be the rate equal to: (i) the weekly average interest rate of U.S. Treasury securities having an index maturity of five years for the week that ends immediately before the week in which the relevant CMT Determination Date falls, as such rate appears on page "7052" on Telerate (or such other page as may replace the 7052 page on that service or any successor services) under the heading "... Treasury Constant Maturities ... Federal Reserve Board Release H.15 ... Mondays Approximately 3:45 p.m." (ii) If the applicable rate described in clause (i) above is not displayed on Telerate page 7052 at 3:00 p.m., New York City time, on the relevant CMT Determination Date, then the 5-year CMT Rate will be the Treasury constant maturity rate applicable to a five-year index maturity for the weekly average as published in H.15(519) (as defined below). 18 (iii) If the applicable rate described in clause (ii) above does not appear in H.15(519) at 3:00 p.m., New York City time, on the relevant CMT Determination Date, then the 5-year CMT Rate will be the Treasury constant maturity rate, or other U.S. Treasury rate, applicable to a five-year index maturity with reference to the relevant CMT Determination Date, that: (a) is published by the Board of Governors of the Federal Reserve System, or the U.S. Department of the Treasury; and (b) is determined by the Association to be comparable to the applicable rate formerly displayed on Telerate page 7052 and published in H.15(519). (iv) If the rate described in clause (iii) above does not appear at 3:00 p.m., New York City time, on the relevant CMT Determination Date, than the 5-year CMT Rate will be the yield to maturity of the arithmetic mean of the secondary market offered rates for Treasury notes having an original maturity of approximately five years and a remaining term to maturity of not less than four years, and in a representative amount, as of approximately 3:30 p.m., New York City time, on the relevant CMT Determination Date, as quoted by three primary U.S. government securities dealers in New York City selected by the Association. In selecting these offered rates, the Association will request quotations from five primary dealers and will disregard the highest quotation - or, if there is equality, one of the highest - and the lowest quotation - or, if there is equality, one of the lowest. (v) If the Association is unable to obtain three quotations of the kind described in clause (iv) above, the CMT Rate will be the yield to maturity of the arithmetic mean of the secondary market offered rates for Treasury notes with an original maturity longer than five years and a remaining term to maturity closest to five years, and in a representative amount, as of approximately 3:30 p.m., New York City time, on the relevant CMT Determination Date, as quoted by the three primary U.S. governmental securities dealers in New York City selected by the Association. In selecting these offered rates, the Association will request quotations from five primary declares and will disregard the highest quotation - or, if there is equality, one of the highest - and the lowest quotation, or, if there is equality, one of the lowest. (vi) If fewer than five but more than two primary dealers are quoting offered rates as described above in clause (v), then the 5-year CMT Rate for the relevant CMT Determination Date will be based on the arithmetic mean of the offered rates so obtained, and neither the highest nor the lowest of those quotations will be disregarded. 19 (vii) If two or fewer primary dealers are quoting offered rates as described above in clause (v), the 5-year CMT Rate in effect for the new dividend period will be the 5-year CMT Rate in effect for the prior dividend period. As used in this definition, "H.15(519)" means the weekly statistical release entitled "Statistical Release H.15(519)," or any successor publication, published by the Board of Governors of the Federal Reserve System. Absent manifest error, the Association's determination of the 5-year CMT Rate will be final and binding. "Association" means U.S. Bank National Association (formerly named Firstar Bank, National Association), a national banking association. "Business Day" means a day on which the New York Stock Exchange is open for trading and which is not a day on which banking institutions in The City of New York and Milwaukee, Wisconsin are authorized or required by law or executive order to close. "Calculation Agent" means any Person authorized by the Association to determine the Series B Dividend Rate, which initially shall be the Association. "CMT Determination Date" has the meaning set forth in Section 5.02(c)(i)(2) hereof. "Dividend Payment Date" means, as the context requires, a Series A Dividend Payment Date, a Series B Dividend Payment Date or a Series C Dividend Payment Date. "Exchange Date" means, as the context requires, any date on which the Realty Company Series B Exchangeable Stock is exchanged for the Series A Preferred Stock, any date on which the Realty Company Series C Exchangeable Stock is exchanged for the Series B Preferred Stock, or any date on which the Funding Company Exchangeable Securities are exchanged for the Series C Preferred Stock. "Firstar Realty" means Firstar Realty L.L.C., an Illinois limited liability company. "Funding Company Exchangeable Securities" means the Non-Cumulative Exchangeable Preferred Securities of USB Funding LLC, a Delaware limited liability company. "Issue Date" means, as the context requires, the first date on which shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock are issued. "Person" means any individual, firm, bank or other entity and shall include any successor (by merger or otherwise) of such entity. "Realty Company Series B Exchangeable Stock" means the Series B Non-Cumulative Exchangeable Preferred Stock of Firstar Realty. 20 "Realty Company Series C Exchangeable Stock" means the Series C Non-Cumulative Exchangeable Preferred Stock of Firstar Realty. "Record Date" means the 15th day of the month in which the applicable Dividend Payment Date falls for dividends declared by the Board of Directors. "Series A Dividend Payment Date" means each June 30 and December 31 of each year. "Series A Dividend Period" is the period from a Series A Dividend Payment Date to, but excluding, the next succeeding Series A Dividend Payment Date, except that the initial Series A Dividend Period shall commence on the date of the original issuance of shares of Series A Preferred Stock. "Series A Dividend Rate" has the meaning set forth in Section 5.01(c)(i) hereof. "Series A Junior Securities" has the meaning set forth in Section 5.01(b) hereof. "Series A Liquidation Value" has the meaning set forth in Section 5.01(a) hereof. "Series A Notice of Redemption" has the meaning set forth in Section 5.01(f)(i) hereof. "Series A Parity Securities" has the meaning set forth in Section 5.01(b) hereof. "Series A Preferred Stock" has the meaning set forth in Section 5.01(a) hereof. "Series A Redemption Date" has the meaning set forth in Section 5.01(e) hereof. "Series A Redemption Price" has the meaning set forth in Section 5.01(e) hereof. "Series A Senior Securities" has the meaning set forth in Section 5.01(b) hereof. "Series B Dividend Payment Date" means each June 30 and December 31 of each year. "Series B Dividend Period" is the period from a Series B Dividend Payment Date to, but excluding, the next succeeding Series B Dividend Payment Date, except that the initial Series B Dividend Period shall commence on the original issuance of shares of Series B Preferred Stock. "Series B Dividend Rate" has the meaning set forth in Section 5.02(c)(i) hereof. "Series B Junior Securities" has the meaning set forth in Section 5.02(b) hereof. "Series B Liquidation Value" has the meaning set forth in Section 5.02(a) hereof. "Series B Notice of Redemption" has the meaning set forth in Section 5.02(f)(i) hereof. "Series B Parity Securities" has the meaning set forth in Section 5.02(b) hereof. 21 "Series B Preferred Stock" has the meaning set forth in Section 5.02(a) hereof. "Series B Redemption Date" has the meaning set forth in Section 5.02(e) hereof. "Series B Redemption Price" has the meaning set forth in Section 5.02(e) hereof. "Series B Senior Securities" has the meaning set forth in Section 5.02(b) hereof. "Series C Dividend Payment Date" means each January 15 and July 15 of each year. "Series C Dividend Period" is the period from a Series C Dividend Payment Date to, but excluding, the next succeeding Series C Dividend Payment Date, except that the initial Series C Dividend Period shall commence on the original issuance of shares of Series C Preferred Stock. "Series C Dividend Rate" has the meaning set forth in Section 5.03(c)(i) hereof. "Series C Junior Securities" has the meaning set forth in Section 5.03(b) hereof. "Series C Liquidation Value" has the meaning set forth in Section 5.03(a) hereof. "Series C Notice of Redemption" has the meaning set forth in Section 5.03(f)(i) hereof. "Series C Parity Securities" has the meaning set forth in Section 5.03(b) hereof. "Series C Preferred Stock" has the meaning set forth in Section 5.03(a) hereof. "Series C Redemption Date" has the meaning set forth in Section 5.03(e) hereof. "Series C Redemption Price" has the meaning set forth in Section 5.03(e) hereof. "Series C Senior Securities" has the meaning set forth in Section 5.03(b) hereof. "Transfer Agent" means a bank or trust company as may be appointed from time to time by the Board of Directors of the Association, or a committee thereof, to act as transfer agent, paying agent and registrar of the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock. SIXTH: The Board of Directors shall appoint one of its members President of ----- the Association, who shall be Chairman of the Board, unless the Board appoints another Director to be the Chairman of the Board. The Board of Directors shall have the power to appoint one or more Vice Presidents; and to appoint a Cashier and such other officers and employees as may be required to transact the Business of the Association. The Board of Directors shall have the power to define the duties of the officers and employees of the Association; to fix the salaries to be paid to them; to dismiss them; to require bonds from them and to fix the penalty thereof; to regulate the manner in which any increase of the capital of the Association shall be made; to manage and administer the business affairs of the Association; to make all Bylaws that it may be 22 lawful for them to make and generally to do and perform all acts that it may be legal for a Board of Directors to do and perform. SEVENTH: The Board of Directors, without need for approval of shareholders, ------- shall have the power to change the location of the main office of the Association, subject to such limitations as from time to time may be provided by law; and shall have the power to establish or change the location of any branch or branches of the Association to any other location, without the approval of the shareholders, but subject to the approval of the Comptroller of the Currency. EIGHTH: The corporate existence of the Association shall continue until ------ terminated in accordance with the laws of the United States. NINTH: The Board of Directors of the Association, the Chairman of the ----- Board, the President, or any three or more holders of Common Stock owning, in the aggregate, not less than twenty-five percent of the Common Stock of this Association, may call a special meeting of shareholders at any time. Unless otherwise provided by the laws of the United States, a notice of the time, place, and purpose of every annual and special meeting of the shareholders shall be given by first-class mail, postage prepaid, mailed at least ten (10) days prior to the date of such meeting to each shareholder of record entitled to vote at such meeting at his address as shown upon the books of the Association. TENTH: Any person, his heirs, executors, or administrators, may be ----- indemnified or reimbursed by the Association for reasonable expenses actually incurred in connection with any action, suit, or proceeding, civil or criminal, to which he or they shall be made a party by reason of his being or having been a Director, officer, or employee of the Association or of any firm, corporation, or organization which he served in any such capacity at the request of the Association. Provided, however, that no person shall be so indemnified or reimbursed in relation to any matter in such action, suit, or proceeding as to which he shall finally be adjudged to have been guilty of or liable for gross negligence, willful misconduct or criminal acts in the performance of his duties to the Association. And, provided further, that no person shall be so indemnified or reimbursed in relation to any matter in such action, suit, or proceeding which has been made the subject of a compromise settlement except with the approval of a court of competent jurisdiction, or the holders of record of a majority of the outstanding shares of the Association, or the Board of Directors, acting by vote of Directors not parties to the same or substantially the same action, suit or proceeding, constituting a majority of the whole number of Directors. And, provided further, that no Director, officer or employee shall be so indemnified or reimbursed for expenses, penalties or other payments incurred in an administrative proceeding or action instituted by an appropriate bank regulatory agency where said proceeding or action results in a final order assessing civil money penalties or requiring affirmative action by an individual or individuals in the form of payments to the Association. The foregoing right of indemnification shall not be exclusive of other rights to which such person, his heirs, executors, or administrators, may be entitled as a matter of law. The Association may, upon the affirmative vote of a majority of its Board of Directors, purchase insurance for the purpose of indemnifying its Directors, officers and other employees to the extent that such indemnification is allowed in the preceding paragraph. Such insurance may, but need not, be for the benefit of all Directors, officers, or employees. 23 ELEVENTH: Except as otherwise specifically provided in Article Fifth -------- hereof, these Amended and Restated Articles of Association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock of the Association, unless the vote of the holders of a greater amount of stock is required by law and in that case by the vote of the holders of such greater amount. 24 Exhibit 2 --------- Comptroller of the Currency Administrator of National Banks Washington, D.C. 20219 CERTIFICATE I, John D. Hawke, Jr., Comptroller of the Currency, do hereby certify that: 1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and control of all records pertaining to the chartering of all National Banking Associations. 2. "U.S. Bank National Association," Cincinnati, Ohio, (Charter No. 24) is a National Banking Association formed under the laws of the United States and is authorized thereunder to transact the business of banking on the date of this Certificate. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the Treasury Department in the City of Washington and District of Columbia, this 21st day of August, 2001. [SEAL] /s/ John D. Hawks, Jr. ------------------------------------ Comptroller of the Currency 25 Exhibit 3 --------- Comptroller of the Currency Administrator of National Banks Washington, D.C. 20219 Certificate of Fiduciary Powers I, John D. Hawke, Jr., Comptroller of the Currency, do hereby certify that: 1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and control of all records pertaining to the chartering of all National Banking Associations. 2. "U.S. Bank National Association," Cincinnati, Ohio, (Charter No. 24), was granted, under the hand and seal of the Comptroller, the right to act in all fiduciary capacities authorized under the provisions of the Act of Congress approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a, and that the authority so granted remains in full force and effect on the date of this Certificate. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the Treasury Department in the City of Washington and District of Columbia, this 21st day of August, 2001. [SEAL] /s/ John D. Hawke, Jr. ------------------------------------ Comptroller of the Currency 26 Exhibit 4 --------- BYLAWS OF U.S. BANK NATIONAL ASSOCIATION ARTICLE I. - --------- MEETINGS OF SHAREHOLDERS SECTION 1. ANNUAL MEETING The annual meeting of shareholders shall be held at the main banking house of the Association or other convenient place duly authorized by the Board of Directors (the "Board") at 11:00 a.m. on the second Tuesday in March of each year, or such other date or time which the Board may designate at any Board meeting held prior to the required date for sending notice of the annual meeting to the shareholders. Notice of such meeting shall be mailed to shareholders not less than ten (10) or more than sixty (60) days prior to the meeting date. SECTION 2. SPECIAL MEETINGS Special meetings of shareholders may be called and held at such times and upon such notice as is specified in the Articles of Association. SECTION 3. QUORUM A majority of the outstanding capital stock represented in person or by proxy shall constitute a quorum of any meeting of the shareholders, unless otherwise provided by law, but less than a quorum may adjourn any meeting, from time to time, and the meeting may be held as adjourned without further notice. SECTION 4. INSPECTORS The Board of Directors may, and in the event of its failure so to do, the Chairman of the Board may appoint Inspectors of Election who shall determine the presence of quorum, the validity of proxies, and the results of all elections and all other matters voted upon by shareholders at all annual and special meetings of shareholders. SECTION 5. VOTING In deciding on questions at meetings of shareholders, except in the election of directors, each shareholder shall be entitled to one vote for each share of stock held. A majority of votes cast shall decide each matter submitted to the shareholders, except where by law a larger vote is required. In all elections of directors, each shareholder shall have the right to vote the number of shares owned by him for as many persons as there are directors to be elected, or to cumulate such shares and give one candidate as many votes as the number of directors multiplied by the number of his shares equal, or to distribute them on the same principle among as many candidates as he shall think fit. SECTION 6. WAIVER AND CONSENT The shareholders may act without notice or a meeting by a unanimous written consent by all shareholders. 27 ARTICLE II. BOARD OF DIRECTORS SECTION 1. TERM OF NOTICE The directors of this Association shall hold office for one year and until their successors are duly elected and qualified. SECTION 2. REGULAR MEETINGS The organizational meeting of the Board of Directors shall be held on the same date as soon as practical following the annual meeting of shareholders wherever the Directors deem appropriate. Other regular meetings of the Board of Directors shall be held at such time and place as may be designated in the notice of the meeting. When any regular meeting of the Board falls on a holiday, the meeting shall be held on the next banking business day, unless the Board shall designate some other day. SECTION 3. SPECIAL MEETINGS Special meetings of the Board of Directors may be called by the Chairman of the Board of the Association, or at the request of three or more Directors. Notice of the time, place and purposes of such meetings shall be given by letter, by telephone, in person, by facsimile, by electronic mail or other reasonable manner to every Director. SECTION 4. QUORUM A majority of the entire membership of the Board shall constitute a quorum of any meeting of the board. SECTION 5. NECESSARY VOTE A majority of those Directors present and voting at any meeting of the Board of Directors shall decide each matter considered, except where otherwise required by law or the Articles or Bylaws of this Association. SECTION 6. COMPENSATION Directors, excluding full-time employees of the Bank, shall receive such reasonable compensation as may be fixed from time to time by the Board of Directors. SECTION 7. ELECTION-AGE & RETIREMENT-AGE LIMITATION No person shall be elected or re-elected a Director after reaching his seventieth (70th) birthday. Every Director of the Bank shall retire no later than the first month next following his seventieth (70th) birthday. SECTION 8. DIRECTORS EMERITUS The Board shall have the right from time to time to choose as Directors Emeritus persons who have had prior service as members of the Board and who may receive such compensation as shall be fixed from time to time by the Board of Directors. 28 ARTICLE III. OFFICERS - -------- SECTION 1. WHO SHALL CONSTITUTE The Officers of the Association shall be a Chairman of the Board, Chief Executive Officer, a President, a Secretary, and other officers such as Vice Chairman of the Board, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, Vice Presidents, Assistant Vice Presidents, Assistant Secretaries, Trust Officers, Trust Investment Officers, Trust Real Estate Officers, Assistant Trust Officers, Controller, Assistant Controller, Auditor and Assistant Auditors, as the Board may appoint from time to time. The Board may choose to delegate authority to elect officers other than the Chairman, Chief Executive Office, President, Secretary, Vice Chairman and Executive Vice Presidents, to the Chief Executive Officer or President. Any person may hold two offices. The Chairman of the Board, all Vice Chairmen of the Board, Chief Executive Officer and the President shall at all times be members of the Board of Directors. SECTION 2. NUMBER As provided in the Articles of Association, the Board of this Association shall consist of not less than five nor more than twenty-five members. At any meeting of the shareholders held for the purpose of electing directors, or changing the number thereof, the number of directors may be determined by a majority of the votes cast by the shareholders in person or by proxy. Any vacancy occurring in the Board shall be filled by the remaining directors. Between meetings of the shareholders held for the purpose of electing directors, the Board by a majority vote of the full Board may increase the size of the Board by not more than four directors in any one year, but not to more than a total of twenty-five directors, and fill any vacancy so created in the Board. All directors shall hold office until their successors are elected and qualified. SECTION 3. TERM OF OFFICE All officers shall be elected for and shall hold office for one year and until their successors are elected and qualified, subject to the right in the Board of directors by a majority vote of the entire membership to discharge any officer at any time. SECTION 4. CHAIRMAN OF THE BOARD The Chairman of the Board shall have general executive powers and duties and shall perform such other duties as may be assigned from time to time by the Board of Directors. He shall, when present, preside at all meetings of the shareholders and directors and shall be ex officio a member of all committees of the Board. He shall name all members of the committees of the Board, subject to the confirmation thereof by the Board. SECTION 5. CHIEF EXECUTIVE OFFICER The Chief Executive Officer, who may also be the Chairman or the President, shall have general executive powers and duties and shall perform such other duties as may be assigned from time to time by the Board of Directors. SECTION 6. PRESIDENT 29 The President shall have general executive powers and duties and shall perform such other duties as may be assigned from time to time by the board of Directors. In addition, if designated by the Board of Directors, the President shall be the Chief Executive Officer and shall have all the powers and duties of the Chief Executive Officer, including the same power to name temporarily a Chief Executive Officer to serve in the absence of the President if there is a vacancy in the position of the chairman or in the event of the absence or incapacity of the Chairman. SECTION 7. VICE CHAIRMAN OF THE BOARD The Board of directors shall have the power to elect one or more Vice Chairmen of the Board of Directors. Any such Vice Chairmen of the Board shall participate in the formation of the policies of the Association and shall have such other duties as may be assigned to him from time to time by the Chairman of the Board or by the Board of Directors. SECTION 8. OTHER OFFICERS The Secretary and all other officers appointed by the Board of Directors shall have such duties as defined by law and as may from time to time be assigned to them by the chief executive Officer or the Board of Directors. SECTION 9. RETIREMENT Every officer of the Association shall retire not later than the first of the month next following his 65th birthday. The Board of directors may, in its discretion, set the retirement date and terms of retirement of an officer at a date later than provided above. ARTICLE IV. COMMITTEES SECTION 1. COMPENSATION COMMITTEE The duties of the Compensation Committee of the Association shall be carried out by the Compensation Committee of the financial holding company that is the parent of this Association. SECTION 2. COMMITTEE ON AUDIT The duties of the Audit Committee of the Association shall be carried out by the Audit Committee of the financial holding company that is the parent of this Association. SECTION 3. TRUST COMMITTEE The Board of Directors of this Association shall also serve as the Trust Committee. The Trust Committee shall determine policies of the Department and review actions of the Trust Policy Committee. All actions of the Trust Committee shall be reported to the Board of Directors. SECTION 4. TRUST POLICY COMMITTEE There shall be a standing committee of this association to be known as the Trust Policy 30 Committee composed of the officers of the Association. The Trust Policy Committee or such officers as may be duly designated by the Trust Policy Committee, shall pass upon the acceptance of all trusts, the closing out or relinquishment of all trusts and the making, retention, or disposition of all investments of trust funds in conformity with policies established by the Trust Committee. Action of the Trust Policy Committee shall be reported to the Trust Committee. SECTION 5. PENSION COMMITTEE The duties of the Pension Committee of the Association shall be carried out by the Compensation Committee of the financial holding company that is the parent of this Association. SECTION 6. OTHER COMMITTEES The Chairman may appoint, from time to time, other committees for such purposes and with such powers as he or the Board my direct. ARTICLE V. MINUTE BOOK The organization papers of this Association, the Bylaws as revised or amended from time to time and the proceedings of all regular and special meetings of the shareholders and the directors shall be recorded in a minute book or books. All reports of committees required to be made to the Board shall be recorded in a minute book or shall be filed by the recording officer. The minutes of each meeting of the shareholders and the Board shall be signed by the recording officer. ARTICLE VI. CONVEYANCES, CONTRACTS, ETC. All transfers and conveyances of real estate, mortgages, and transfers, endorsements or assignments of stock, bonds, notes, debentures or other negotiable instruments, securities or personal property shall be signed by any elected or appointed officer. All checks, drafts, certificates of deposit and all funds of the Association held in its own or in a fiduciary capacity may be paid out by an order, draft or check bearing the manual or facsimile signature of any elected or appointed officer of the Association. All mortgage satisfactions, releases, all types of loan agreements, all routine transactional documents of the Association, and all other instruments not specifically provided for, whether to be executed in a fiduciary capacity or otherwise, may be signed on behalf of the Association by any elected or appointed officer thereof. The Secretary or any Assistant Secretary of the Association or other proper officer may execute and certify that required action or authority has been given or has taken place by resolution of the Board under this Bylaw without the necessity of further action by the Board. 31 ARTICLE VII. SEAL The Association shall have no corporate seal. 32 ARTICLE VIII. INDEMNIFICATION OF DIRECTORS, OFFICERS, AND EMPLOYEES SECTION 1. INDEMNIFY The Association shall indemnify such persons for such liabilities in such manner under such circumstances and to such extent as permitted by the corporate laws of the Sate of Ohio as enacted or amended. The Board of Directors may authorize the purchase and maintenance of insurance and/or the execution of individual agreements for the purpose of such indemnification, and the Association shall advance all reasonable costs and expenses (including attorneys' fees) incurred in defending any action, suit or proceeding to all persons entitled to indemnification under this Section 1. SECTION 2. PAYMENTS Notwithstanding Section 1, however, (a) any indemnification payments to an institution-affiliated party, as defined at 12 USC 1813(u), for an administrative proceeding or civil action initiated by a federal banking agency, shall be reasonable and consistent with the requirements of 12 USC 1828(k) and the associated regulations; and (b) any indemnification payments and advancement of costs and expenses to an institution-affiliated party, as defined at 12 USC 1813(u), in cases involving an administrative proceeding or civil action not initiated by a federal banking agency, shall be consistent with safe and sound banking practices. ARTICLE IX. AMENDMENTS These Bylaws, or any of them, may be added to, altered, amended or repealed by the Board at any regular or special meeting of the Board. ARTICLE X. GOVERNING LAW This Association designates the Ohio Business Corporation Act, as amended from time to time, as the governing law for its corporate governance procedures, to the extent not inconsistent with Federal banking statutes and regulations. 33 Exhibit 6 --------- CONSENT In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Dated: November 9, 2001 U.S. BANK NATIONAL ASSOCIATION By: /s/ Julie Eddington -------------------------------------------- Julie Eddington Assistant Vice President By: /s/ Lori-Anne Rosenberg ----------------------------------- Lori-Anne Rosenberg Assistant Vice President 34 Exhibit 7 --------- U.S. Bank National Association Statement of Financial Condition As of 6/30/2001 ($000's)
6/30/2001 --------- Assets Cash and Due From Depository Institutions $ 3,561,101 Federal Reserve Stock 0 Securities 4,731,459 Federal Funds 1,058,080 Loans & Lease Financing Receivables 62,250,889 Fixed Assets 558,051 Intangible Assets 5,316,987 Other Assets 2,975,129 ----------- Total Assets $80,451,696 Liabilities Deposits $52,892,333 Fed Funds 1,342,118 Treasury Demand Notes 0 Trading Liabilities 90,576 Other Borrowed Money 11,563,493 Acceptances 138,422 Subordinated Notes and Debentures 2,430,442 Other Liabilities 1,542,375 ----------- Total Liabilities $69,999,759 Equity Minority Interest in Subsidiaries $ 766,058 Common and Preferred Stock 321,551 Surplus 6,094,941 Undivided Profits 3,269,387 ----------- Total Equity Capital $10,451,937 Total Liabilities and Equity Capital $80,451,696
- -------------------------------------------------------------------------------- To the best of the undersigned's determination, as of this date the above financial information is true and correct. U.S. Bank National Association By: /s/ Julie Eddington ------------------------------ Assistant Vice President Date: November 9, 2001 35 -----END PRIVACY-ENHANCED MESSAGE-----