Exhibit 10.1
CONVERSION AND TERMINATION
AGREEMENT
THIS CONVERSION AND TERMINATION
AGREEMENT (this “
Agreement ”) is made as of the 10th day of
November, 2005, by and between ON Semiconductor Corporation, a
Delaware corporation (the “ Company ”),
and TPG ON Holdings LLC, a Delaware limited liability company
(“ TPG ” or the “
Investor ”).
RECITALS
WHEREAS, the Company and the
Investor are parties to an Investment Agreement, dated as of
September 7, 2001 (the “ Investment
Agreement ”), pursuant to which the Investor
purchased from the Company 10,000 shares of the Company’s
Series A Cumulative Convertible Preferred Stock (the “
Preferred Stock ”), with a stated value of
$10,000 per share (the “ Stated Value ”)
and having the rights, preferences, privileges and restrictions set
forth in the Certificate of Designations relating to the Preferred
Stock (as amended as of the date hereof, the “
Certificate of Designations ”);
WHEREAS, pursuant to Section VIII of
the Certificate of Designations, each share of Preferred Stock may
be converted, at the option of the holder, into that number of
fully paid and nonassessable shares of Common Stock equal to the
quotient of (i) the sum of (A) the Stated Value plus
(B) all unpaid dividends accumulated on such share of
Preferred Stock to the Conversion Date whether or not such
dividends have been declared ((A) and (B) collectively, the
“ Accumulated Value ”), divided by
(ii) the Conversion Price in effect on the Conversion
Date;
WHEREAS, subject to and upon the
terms and conditions of this Agreement, the Investor has agreed to
convert all outstanding shares of Preferred Stock into 49,364,080
shares of Common Stock (the “ Conversion Shares
”) on and as of the date hereof (the “ Conversion
Date ”) in accordance with Section VIII of the
Certificate of Designations and, simultaneously with the execution
and delivery hereof, has submitted a notice of conversion of the
Preferred Stock in the form of Exhibit A hereto and
delivered to the Company the certificate(s) representing all
outstanding shares of Preferred Stock;
WHEREAS, as an inducement to the
Investor agreeing to the conversion of the Preferred Stock, the
Investor has required that the Company agree, and the Company has
agreed, to issue to the Investor an additional 3,949,126 shares of
Common Stock on the Conversion Date (the “ Inducement
Shares ”), which number of shares is equal to 8% of
the Conversion Shares, and to amend the Registration Rights
Agreement to provide for the registration of the Inducement Shares
together with the Conversion Shares; and
WHEREAS, in connection with the
conversion of the Preferred Stock, the Company and the Investor
have agreed to terminate all existing agreements, whether written
or oral, express or implied, relating to the Preferred Stock (other
than this Agreement and the Registration Rights
Agreement).
NOW, THEREFORE, in consideration of
the foregoing, the mutual promises contained herein, and other good
and valuable consideration, the sufficiency of which is hereby
acknowledged, intending to be legally bound hereby, the parties
agree as follows:
ARTICLE 1
DEFINITIONS;
INTERPRETATION
1.1 Certain Definitions.
Capitalized terms used but not otherwise defined herein have the
meanings assigned thereto in the Investment Agreement.
1.2 Defined Terms. As used in
this Agreement, the following terms shall have the following
meanings:
“ Common Stock
” means the Company’s common stock, $0.01 par value per
share.
“ Conversion
Date ” means the date of this Agreement.
“ Deferred Issuance
Date ” means the date that is five trading days after
the earlier of (i) the date that the Company receives written
or oral confirmation from Nasdaq that stockholder approval is not
required with respect to the issuance of the Inducement Shares and
(ii) in the event that such approval is required, the date
that the required stockholder approval is obtained.
“ Registration Rights
Agreement ” means that certain Registration Rights
Agreement, dated as of September 7, 2001, between the Company
and the Investor.
1.3 Interpretation. When a
reference is made in this Agreement to Exhibits or Sections, such
reference shall be to an Exhibit or Section of this Agreement.
Unless otherwise indicated the words “include,”
“includes” and “including” when used herein
shall be deemed in each case to be followed by the words
“without limitation.” The headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
ARTICLE 2
CONVERSION
2.1 Conversion.
Simultaneously with the execution and delivery hereof, the Investor
shall have delivered to the Company an irrevocable notice of
conversion of the Preferred Stock in the form of Exhibit A
hereto, accompanied by stock certificate(s) representing all
outstanding shares of Preferred Stock, and the Preferred Stock
shall be converted in accordance with Section VIII of the
Certificate of Designations into 49,364,080 shares of Common Stock
as of the Conversion Date, based on a Conversion Price of $2.82 and
Accumulated Value of $139,206,707 as of the Conversion Date. The
Conversion Shares shall be issued in the manner provided in Section
VIII of the Certificate of Designations.
2.2 Inducement
Shares.
(a) In consideration of the
conversion of the Preferred Stock, simultaneously with the issuance
of the Conversion Shares or at such later date as is provided in
Section 2.2(b) hereof, the Company shall issue to the Investor
3,949,126 shares of Common Stock, representing the Inducement
Shares
2
(b) In the event that the Company
concludes, in consultation with legal counsel, that approval of the
Company’s stockholders may be required under NASD Rules with
respect to the issuance of the Inducement Shares, the Company may
defer the issuance of the Inducement Shares until the Deferred
Issuance Date. If the Company elects to defer the issuance of the
Inducement Shares until the Deferred Issuance Date, the Company
shall (i) use its best efforts to obtain confirmation from
Nasdaq that such stockholder approval is not required and
(ii) if applicable, use its best efforts to obtain such
stockholder approval until such approval is duly obtained by the
Company and take all action necessary to present such matter for
stockholder approval at each meeting of stockholders of the
Company, annual or otherwise, held after the execution of this
Agreement. Each meeting of stockholders at which such matter is
considered is referred to herein as a “ Stockholder
Meeting ”. The Company shall use it best efforts to
obtain the required approval of its stockholders of the issuance of
the Inducement Shares at each Stockholder Meeting, it being
understood that, except as provided in the following sentence, the
Company shall have no obligation to call a special meeting for the
purpose of obtaining such stockholder approval. Upon written
request of the Investor to the Company delivered at any time on or
prior to December 31, 2005, the Company shall file with the
Commission a Proxy Statement no later than 30 days after the date
of such request, and the Company shall use its best efforts to hold
a Stockholder Meeting no later than 90 days after the date of such
request.
(c) Any such Proxy Statement shall
contain the recommendation of the Board of Directors that the
stockholders approve the issuance of the Inducement Shares. The
Company shall notify the Investor promptly of the receipt by it of
any comments from the Commission or its staff and of any request by
the Commission for amendments or supplements to such Proxy
Statement or for additional inform
