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Exhibit
10.3a
FIRST AMENDMENT TO
CREDIT AGREEMENT AND WAIVER
THIS FIRST AMENDMENT TO
CREDIT AGREEMENT AND WAIVER (as the same may be amended, restated,
supplemented, extended or otherwise modified from time to time,
this “ Agreement ”) is entered into as of May 6,
2005, by and among MAGNACHIP SEMICONDUCTOR S.A., a
société anonyme , organized and existing under the
laws of the Grand Duchy of Luxembourg, having its registered office
at 10, rue de Vianden, L-2680 Luxembourg, Grand Duchy of
Luxembourg, registered with the Luxembourg Register of commerce and
companies under the number B 97,483, MAGNACHIP SEMICONDUCTOR
FINANCE COMPANY, a Delaware corporation (collectively, “
Borrowers ”), MAGNACHIP SEMICONDUCTOR LLC, a Delaware
limited liability company (“ Holdings ”), the
Subsidiary Guarantors listed on the signature pages hereto (each of
Borrowers, Holdings and Subsidiary Guarantors are sometimes
referred to herein as a “ Loan Party ” and,
collectively, as the “ Loan Parties ”), the
Lenders and UBS AG, STAMFORD BRANCH, as administrative agent (in
such capacity, “ Administrative Agent ”) for the
Lenders and as collateral agent (in such capacity, “
Collateral Agent ” and together with the
Administrative Agent, the “ Agents ” and each an
“ Agent ”) for the Secured Parties and the
Issuing Bank.
RECITALS
A. The Borrowers, Holdings,
Subsidiary Guarantors, UBS Securities LLC, as lead arranger, as
documentation agent and as syndication agent, UBS Loan Finance LLC,
as swingline lender, Korea Exchange Bank, as issuing bank and
Agents are parties to that certain Credit Agreement dated as of
December 23, 2004 (as amended hereby, and as the same has been and
hereafter may be amended, restated, supplemented or otherwise
modified from time to time, the “ Credit Agreement
”). Unless otherwise specified herein, all capitalized terms
used in this Agreement shall have the meanings ascribed to them in
the Credit Agreement.
B. The Borrowers have
informed the Agents that certain Defaults and Events of Default
described in Exhibit A attached hereto (the “
Specified Defaults ”) have occurred and have been or
are expected to be cured by the Borrowers.
C. The Borrowers have
requested that the Agents and the Required Lenders waive the
Specified Defaults and amend Sections 6.15 and 6.24 of the Credit
Agreement, all upon the terms and subject to the conditions as
herein set forth.
NOW, THEREFORE, in
consideration of the foregoing, the covenants and conditions
contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Amendments
to Credit Agreement .
(a) The definition of
“Subsidiary” in Section 1.01 of the Credit Agreement is
hereby amended to insert “or Holdings” after the
reference to “Borrower” in the final sentence
thereof.
(b) The definition of
“Subsidiary Guarantor” in Section 1.01 of the Credit
Agreement is hereby amended to replace the reference to
“Section 5.11” with a reference to “Section
5.10.”
(c) Section 5.01 of the
Credit Agreement is hereby amended to add a new Subsection (l) to
read as follows:
“(l) Japan and
Taiwan Average Monthly Balance . Within five (5) Business Days
after the end of each month commencing with the month ending April
30, 2005, a certificate of a Financial Officer of Borrowers setting
forth the aggregate average monthly balance for the preceding month
of the deposit accounts, securities accounts or similar accounts
which are subject to Section 6.24 and which are located in Japan
and Taiwan.”
(d) Subsection 5.10(a) of the
Credit Agreement is amended to replace the reference to
“Section 5.11” with a reference to “Section
5.10.”
(e) The introductory language
set forth in Subsection 5.10(b) up to clause (i) thereof is hereby
deleted in its entirety and replaced with the following:
“Subject to the terms
of the Intercreditor Agreement, with respect to any person that is
or becomes a Subsidiary of either Borrower or Holdings after the
Closing Date, promptly (and in any event within 30 days after such
person becomes a Subsidiary of either Borrower or
Holdings)”
(f) Section 6.14 of the
Credit Agreement is hereby amended and restated in its entirety to
read as follows:
“ SECTION 6.14
Limitation on Creation of Subsidiaries . Establish,
create or acquire any additional Subsidiaries without the prior
written consent of the Required Lenders; provided that,
without such consent, (i) any Borrower may establish or create one
or more Wholly Owned Subsidiaries of such Borrower, (ii) any
Borrower may establish, create or acquire one or more Subsidiaries
in connection with an Investment made pursuant to Section
6.04(f) , (iii) any Borrower may acquire one or more
Subsidiaries in connection with a Permitted Acquisition or (iv)
Holdings may acquire or form one or more Subsidiaries in connection
with a Permitted Acquisition, so long as, in each case, Section
5.10(b) shall be complied with.
(g) Clause (a)(i) of Section
6.15 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
“(i) its ownership of
the Equity Interests of the Borrowers, the U.S. Sales Subsidiary,
and any other Subsidiary acquired or formed by Holdings in
connection with a Permitted Acquisition,”
(h) Clause (iii) of Section
6.24 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
“(iii) other accounts
(excluding those set forth in clause (iv) below) that do not
contain funds in the aggregate in excess of $2,000,000 at any time,
and (iv)
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accounts located in Japan and
Taiwan that do not have an average monthly balance exceeding
$5,000,000 and for which steps needed to perfect have not been
consummated despite Borrowers’ commercially reasonable
efforts to do so.”
SECTION 2.
Acknowledg ement by Borrowers of Obligations and Existing
Defaults and Events of Default .
The Borrowers hereby
acknowledge, confirm, and agree that as of the close of business on
April 19, 2005, (a) the Borrowers are not indebted to the Lenders
in respect of the Revolving Loans and (b) the Borrowers are
indebted to the Lenders in respect of the Letters of Credit in the
principal amount of approximately $13.6 million (subject to
currency exchange fluctuations and reductions for any Letters of
Credit which are drawn and reimbursed after April 20, 2005). Each
of the Borrowers and the other Loan Parties represents, warrants
and agrees that except for the Specified Defaults, no other
Defaults or Events of Default have occurred which remain continuing
as of the date hereof.
SECTION 3. Waiver
.
(a) Subject to the
satisfaction of the conditions precedent set forth in Section 12
hereof, the Agents and Lenders hereby waive the Specified Defaults.
The foregoing waiver shall (i) not be deemed a waiver of any other
Default or Event of Default which has occurred, exists or hereafter
may occur under the Credit Agreement or any other Loan Document;
(ii) not be deemed to establish a custom or course of dealing among
the Administrative Agent, Collateral Agent, Lenders, Borrowers
other Loan Parties or any of them; and (iii) expire on May 13,
2005, if by such date Borrowers have failed to (w) fully comply
with Section 6.24 of the Credit Agreement, (x) deliver the
certification required by Section 5.01(j) of the Credit Agreement,
(y) deliver the financial information required under Sections
5.01(a), (c) and (d) of the Credit Agreement, and (z) take the
actions required under Sections 5.10 and 6.14 of the Credit
Agreement and Section 6.19 of the Security Agreement in connection
with the ISRON Acquisition (as defined on Exhibit A). Upon the
acquisition of ICM Corporation (“ ICM ”),
Holdings acquired the subsidiaries of ICM organized in Taiwan
(“ ICM Taiwan ”), Japan (“ ICM
Japan ”), British Virgin Islands (“ ICM BVI
”), Cayman Islands (“ ICM Cayman ”) and
China (“ ICM China ” and, together with ICM
Taiwan, ICM Japan, ICM BVI and ICM Cayman, the “ ICM
Foreign Subs ”). Holdings intends to cause ICM to
liquidate, merge into existing Subsidiary Guarantors or otherwise
dispose of the ICM Foreign Subs (the “ Disposition
”). Accordingly, subject to the satisfaction of the
conditions precedent set forth in Section 12 hereof, the Agents and
Lenders hereby waive the requirement that the ICM Foreign Subs
become Subsidiary Guarantors and grant a Lien on their assets and
that any Company pledge of any securities of, or existing
intercompany notes with, the ICM Foreign Subs; provided ,
however , if the Disposition is not consummated by June 15,
2005, each of the ICM Foreign Subs shall be required to become, and
shall have become, Subsidiary Guarantors to the extent required by
the Credit Agreement.
Notwithstanding anything to
the contrary contained in the Credit Agreement or any other Loan
Document, the Agent may extend the time period set forth in clause
(a)(iii)(w) of this Section 3 in its sole and absolute discretion;
provided , however , any such extension
shall
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only be valid if in writing signed by an
authorized representative of the Administrative Agent and
acknowledged by the Borrowers; provided , further ,
in no event shall any such extension be beyond June 30,
2005.
SECTION 4.
Representations, Warranties and Covenants
of Loan Parties . To induce the Agents and Lenders to
execute and deliver this Agreement, each of the Loan Parties
represent, warrant and covenant that:
(a) The execution, delivery
and performance by the Loan Parties of this Agreement and all
documents and instruments delivered in connection herewith and the
Credit Agreement and all other Loan Documents have been duly
authorized, and this Agreement and all documents and instruments
delivered in connection herewith and the Credit Agreement and all
other Loan Documents are legal, valid and binding obligations of
the Loan Parties enforceable against the Loan Parties in accordance
with their respective terms, except as the enforcement thereof may
be subject to (i) the effect of any applicable bankrupt
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