Exhibit 10.33

 

SEPARATION AGREEMENT

 

THIS SEPARATION AGREEMENT (the “Agreement”) is made and entered into and is
effective as of this 10th day of February 2004, by and among ST Assembly Test
Services Ltd, a Singapore public company limited by shares (the “Company”),
CHIPPAC, Inc., a Delaware company (“CHIPPAC”) and Dennis McKenna (the
“Executive”).

 

WHEREAS, the Executive is currently employed by CHIPPAC, and is a party to an
employment agreement, dated October 1, 1999, as the same may have been amended
from time to time, with CHIPPAC (the “Existing Employment Agreement”); and

 

WHEREAS, in connection with the transaction contemplated by the Agreement and
Plan of Merger and Reorganization among the Company, Camelot Merger, Inc. and
CHIPPAC that is contemplated to be entered into contemporaneously with the
execution of this Agreement (the “Merger Agreement”), ChipPAC will become a
wholly owned subsidiary of the Company; and

 

WHEREAS, the Executive now desires to resign from his position as President and
Chief Executive Officer (“CEO”) of CHIPPAC, effective as of the Effective Date
(as hereinafter defined);

 

WHEREAS, incidental to the Executive’s resignation described in the foregoing
recital, the Executive now desires to relinquish his position as a member of the
Board of Directors of CHIPPAC, effective as of the Effective Date; and

 

WHEREAS, the Company believes that it is in the best interests of its
shareholders to appoint the Executive to serve as a member of and Vice Chairman
of the Board of Directors of the Company (the “Board”), and the Executive has
agreed to serve in such capacity; and

 

WHEREAS, the parties intend that this Agreement shall set forth the terms of
their agreement with respect to the foregoing and that this Agreement shall
supersede all prior agreements between CHIPPAC and the Executive, including the
Existing Employment Agreement, as of the Effective Date (as hereinafter
defined), and the Chief Executive Officer Management Incentive Agreement, dated
as of August 1, 1998, as the same may have been amended or modified from time to
time, by and between CHIPPAC and the Executive (other than that certain Mutual
Release of Claims attached as Exhibit A thereto).

 

NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants, terms and conditions set forth herein, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

 

1. Effectiveness of Agreement. This Agreement shall constitute a binding
obligation of the Executive and the Company upon the execution of this
Agreement; provided,

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however, that any other provision in this Agreement to the contrary
notwithstanding, the terms hereof shall not become effective until the
consummation of the transactions contemplated by the Merger Agreement (the
“Effective Date”). In the event that the Merger Agreement is terminated prior to
the Closing (as defined in the Merger Agreement) or the transactions
contemplated in the Merger Agreement are not consummated, this Agreement shall
be null and void ab initio and shall terminate without further notice.

 

2. Resignation from Office. Effective as of the Effective Date, the Executive
shall resign from his position as President and Chief Executive Officer of
CHIPPAC. Incidental to such resignation, the Executive will relinquish his
position as a member of the Board of Directors of CHIPPAC, and from each and
every other position as an employee, officer or director of CHIPPAC, its
subsidiaries and associated companies on the Effective Date.

 

3. Vice Chairman of the Board. The Company shall nominate the Executive to
serve, effective as of the Effective Date, as a member and Vice Chairman of the
Board for a term to continue through December 31, 2004, or such earlier date as
mutually agreed upon by the Company and the Executive (the “Term”). The
Executive hereby agrees to resign on December 31, 2004 as a member of the Board
and from his position as Vice Chairman of the Board, and on such date, he shall
deliver a letter of resignation in the form attached hereto as Exhibit A.

 

4. Consideration. In consideration of the Executive’s covenants contained in
this Agreement (in particular, his resignation as President and CEO of ChipPAC)
and his execution and delivery of a Release Agreement in the form set forth as
Exhibit B hereto (the “Release”) on the Effective Date, CHIPPAC shall provide
the Executive with the following payments and benefits:

 

(a) Payment. On the day next following the expiration of the Revocation Period
(as defined in the Release), CHIPPAC shall pay the Executive an amount equal to
three times the Executive’s annual base salary at the rate in effect immediately
preceding the Effective Date, plus three times the Executive’s annual target
bonus at the rate in effect immediately preceding the Effective Date.

 

(b) Option Vesting Acceleration. Effective as of the day next following the
expiration of the Revocation Period, all equity-based compensation awards with
respect to the equity securities of CHIPPAC held by the Executive shall vest in
full and become immediately exercisable and shall remain exercisable until the
first anniversary of date that the awards become fully vested in accordance with
this Section 4(b).

 

(c) Term Life Insurance. Effective as soon as practicable following the
expiration of the Revocation Period, CHIPPAC shall fund in full the term life
insurance policy provided to the Executive pursuant to the terms of the Existing
Employment Agreement.

 

(d) Medical and Dental Benefits. CHIPPAC shall pay for the cost of insurance
premiums with respect to medical and dental benefits for the Executive and his
dependents during the period commencing as of the day next following the
expiration of the Revocation Period and continuing until the date that is the
earlier of the third anniversary of the day next following the expiration of the
Revocation Period and the date that the Executive becomes entitled to
participate in employee benefit plans of a subsequent employer that provide for
medical and dental benefits that are comparable to the medical and dental
benefits to which the Employee was entitled to receive immediately preceding the
Effective Date.

 

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(e) Cap. Anything to the contrary in this Agreement notwithstanding, the
aggregate amount payable under Section 4(c) and (d) shall in no event exceed
$150.000.00.

 

5. Reduction of Payments. In the event that the severance and other benefits
provided to the Executive under this Agreement or any other agreement or
arrangement constitute “parachute payments” within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”), and, but for this
Section 5, such severance and benefits would be subject to the excise tax
imposed by Section 4999 of the Code, then the aggregate severance and benefits
payable to the Executive under this Agreement shall be reduced such that the
present value thereof (as determined under the Code and the applicable
regulations) is equal to 2.99 times the Executive’s “base amount,” as defined in
Section 280G(b)(3) of the Code. For purposes of applying the provisions of this
Section 5, the Company shall be entitled to rely on the advice of legal counsel
or a nationally recognized accounting firm as to whether any payments or
benefits payable to the Executive constitute “Parachute Payments” under 280G of
the Code.

 

6. No Other Payments or Benefits. Except as otherwise expressly provided in this
Agreement, the Executive acknowledges and agrees that he is not entitled to any
payment, compensation or benefits (whether statutorily or otherwise) from the
Company in connection with this Agreement and that, except as expressly set
forth herein, he is not entitled to any severance or similar benefits under any
agreement, plan, program, policy or arrangement, whether formal or informal,
written or unwritten, of the Company.

 

7. Non-Disparagement. Following the Effective Date, the Executive shall not, nor
shall he cause another person to, directly or indirectly, make any statement
that disparages or is derogatory of the Company or its subsidiaries and
affiliates in any communications with any person.

 

8. Covenants of Executive.

 

(a) Confidential Information. As used in this Agreement, the term “Affiliated
Companies” means the Company’s clients, subcontractors and other companies or
individuals with which the Company carries on business or joint enterprises. As
used in this Agreement, the term “Confidential Information” means any and all
information disclosed, acquired or known to the Executive as a result of
employment with the Company or any of the Affiliated Companies, including,
without limitation, any information gathered or developed by the Executive and
relating to the business of the Company or any of the Affiliated Companies.
Confidential Information includes, without limitation, all documents pertaining
to the business of the Company or any of the Affiliated Companies, including
trade secrets, technical and financial information, data, designs, systems
drawings, proposals, client lists, client records, economic and financial
analysis, financial data, customer contracts, notes, memoranda, books,
correspondence, manuals, reports or research, whether developed by the Company
or any of the Affiliated Companies or developed by the Executive acting alone or
jointly with the Company or any of the

 

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Affiliated Companies, any product development and ideas, apparatus as well as
all other information, written, oral, graphic or computerized relating to the
business of the Company or any of the Affiliated Companies, provided, that
Confidential Information shall exclude (i) any information which is publicly
available, so long as such information was not publicly disclosed by the
Executive or any other person or entity in contravention of a non-disclosure
agreement with the Company; (ii) any information generally available or known in
the industry; and (iii) any information known to the Executive before employment
with the Company. The Executive represents and warrants that the Executive shall
at all times, including following the Effective Date, keep secret and retain in
strictest confidence all Confidential Information, and except as the Executive
may be authorized by the Company or Affiliated Companies in writing, the
Executive agrees not to publish or disclose to any person or entity, or use in
any manner, such Confidential Information. The Executive’s obligations under
this Section 8(a) supplement, and do not limit or replace, any other obligations
that the Executive may have including, but not limited to, obligations under
statute, common law or contract.

 

(b) Noncompetition. The Executive agrees with the Company that for a period of
twenty-four (24) calendar months following the Effective Date (the “Restricted
Period”), the Executive shall not, directly or indirectly, engage in any
business, whether as a proprietor, partner, joint venturer, employer, agent,
employee, consultant, officer or beneficial or record owner of more than one
percent (1%) of the stock of any corporation or association of any nature which
is competitive to the business conducted by the Company or any of the Company’s
subsidiaries, affiliates, successors or assigns (collectively referred to herein
as the “Companies”) in the geographical service area in which the Companies have
engaged or will engage during such period (including, without limitation, any
area in which any client or customer of the Companies may be located).

 

(c) Non-Solicitation. During the Restricted Period, the Executive shall not
directly or indirectly through another person or entity (i) induce or attempt to
induce any employee of the Companies to leave the employ of the Companies, or in
any way interfere with the relationship between any of the Companies and any
employee thereof, (ii) hire any person who was an employee of any of the
Companies at any time during the period that the Executive was employed by the
Company or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Companies that is within
any geographical area in which the Companies engage or plan to engage in such
businesses to cease doing business with the Companies or in any way interfere
with the relationship between any such customer, supplier, licensee or business
relation and the Companies.

 

(d) Non-Disparagement. The Executive agrees that at any time during his
employment with the Company or at any time thereafter, the Executive shall not
make, or cause or assist any other person to make, any statement or other
communication which impugns or attacks, or is otherwise critical of, the
reputation, business or character of the Company, any subsidiary or any of their
respective officers, directors, employees, products or services.

 

(e) Enforcement. The Executive hereby acknowledges that he has carefully
reviewed the provisions of this Agreement and agrees that the provisions are
fair and equitable. However, in light of the possibility of differing
interpretations of law and change in circumstances, the parties hereto agree
that if any one or more of the provisions of this

 

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Agreement is determined by a court of competent jurisdiction to be invalid, void
or unenforceable under circumstances then existing, the parties hereto agree
that the maximum period, scope or geographical area reasonable or enforceable
under such circumstances shall be substituted for the stated period, scope or
area. Because the Executive’s services are unique and because the Executive has
had access to Confidential Information, the parties hereto agree that money
damages will not be an adequate remedy for any breach of this Agreement.
Therefore, in the event a breach or threatened breach of this Agreement, the
Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance, injunctive, other relief of the foregoing in order to
enforce, or prevent any violations of, the provisions hereof (without posting a
bond or other security).

 

9. Severability. Each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement. If any of the provisions contained in
this Agreement shall be determined by a court of competent jurisdiction or an
arbitration to be excessively broad as to duration, activity, geographic
application or subject matter, such provision shall be construed, by limiting or
reducing it to the extent legally permitted, so as to make such provision
enforceable to the extent compatible with then-applicable law.

 

10. Notices. For the purpose of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
sent by messenger, overnight courier, certified or registered mail, postage
prepaid and return receipt requested or by facsimile transmission to the parties
at their respective addresses and fax numbers set forth below or to such other
address or fax number as to which notice is given.

 

If to the Company:    ST Assembly Test Services Ltd     

10 Ang Mo Kio Street 65

    

#05-17/20 Techpoint, Singapore 569059

    

Attention: Linda Nai

    

Facsimile No: (+65) 6720-7829

    

Email Address: nailinda@stats.st.com.sa

If to the Executive:    Dennis McKenna     

4535 Kingwood Drive

    

Danville, California 94506

    

Facsimile: [                            ]

 

Notices, demands and other communications shall be deemed given on delivery
thereof.

 

11. Entire Agreement. This Agreement and the Release represent the entire
agreement of the parties concerning the subject matter of this Agreement and
shall supersede any and all previous contracts, arrangements or understandings
with respect to such subject matter between the Company CHIPPAC and the
Executive including, without limitation, the agreements described in the
recitals to this Agreement.

 

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12. Amendment. This Agreement may be amended at any time by mutual written
agreement of the parties hereto.

 

13. Withholding. Any payments made to the Executive under this Agreement shall
be reduced by the full amount legally required to be withheld for income or
other payroll tax purposes by the CHIPPAC.

 

14. Governing Law. The provisions of this Agreement shall be construed in
accordance with, and governed by, the laws of the State of California, without
regard to principles of conflict of laws.

 

15. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

 

16. Acknowledgement. The Executive acknowledges that (a) he has carefully read
this Agreement and discussed the requirements and limitations of this Agreement,
(b) to the extent the Executive believed necessary, he has consulted with his
own counsel, and (c) he has not relied upon Kirkland & Ellis LLP, counsel for
CHIPPAC, in connection with his decision to execute this Agreement or otherwise
in connection with any other agreement or document that he has entered into in
connection with the Merger Agreement or the transactions contemplated thereby.

 

[SIGNATURE PAGE ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the Company and the Executive, intending to be legally bound
have executed this Agreement on the day and year first above written.

 

ST Assembly Test Services Ltd

By:   /s/    TAN LAY KOON    

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Name: Tan Lay Koon

Title: President and Chief Executive Officer

 

CHIPPAC, Inc.

By:   /s/    DENNIS DANIELS    

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Name: Dennis Daniels

Title: VP Human Resources

 

DENNIS MCKENNA

/s/    DENNIS MCKENNA

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EXHIBIT A

 

December 31, 2004

 

The Board of Directors

Spartacus

5 Yishun Street

Singapore 768442

 

Dear Sirs:

 

Notice of Resignation

 

I, Dennis McKenna, hereby give notice of my resignation as a Director and
Vice-Chairman of Spartacus, such resignation to take effect on 31 December 2004.

 

Yours faithfully,

 

Dennis P. McKenna

 

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EXHIBIT B

 

RELEASE AGREEMENT

 

THIS RELEASE AGREEMENT (the “Release”) is made and entered into and is effective
as of February 10, 2004, by and among ST Assembly Test Services Ltd, a Singapore
public company limited by shares (the “Company”), CHIPPAC, a Delaware company
(“CHIPPAC”), and Dennis McKenna (the “Executive”). In consideration of the
mutual agreements set forth below, the Executive, the Company and CHIPPAC hereby
agree as follows:

 

1. RELEASE OF CLAIMS AGAINST THE COMPANY: For good and valuable consideration,
including the payments and benefits set forth in the Separation Agreement by and
among the Company, CHIPPAC and the Executive, dated February 10, 2004 (the
“Agreement”), of which this Release forms a part, which includes special
enhancements to which the Executive would not otherwise be entitled under
current company policies, plans, and guidelines, the Executive hereby knowingly,
voluntarily, and willingly releases, discharges, and covenants not to sue the
Company and its direct and indirect parents, subsidiaries, affiliates, and
related companies, past and present, as well as each of its and their directors,
officers, employees, and agents thereof, representatives, attorneys, trustees,
insurers, assigns, successors, and agents, past and present (collectively
hereinafter referred to as the “Released Parties”), from and with respect to any
and all actions, claims, or lawsuits, whether known or unknown, suspected or
unsuspected, in law or in equity, which the Executive, and his heirs, executors,
administrators, successors, assigns, dependents, descendants, and attorneys ever
had, now have, or hereafter can, shall or may have against the Released Parties,
arising out of or in any way relating to the Executive’s employment by the
Company and its subsidiaries and affiliates, his separation from that
employment, including, without limitation, the following:

 

  (a) any and all claims relating to or arising from Executive’s employment
relationship with the Company and the termination of that relationship;

 

  (b) any and all claims relating to or arising from Executive’s right to
purchase, or actual purchase, of shares of stock of the Company;

 

  (c) any and all claims for wrongful discharge of employment; breach of
contract, both express and implied; breach of a covenant of good faith and fair
dealing, both express and implied; negligent or intentional infliction of
emotional distress; negligent or intentional misrepresentation; negligent or
intentional interference with contract or prospective economic advantage; and
defamation;

 

  (d) any and all claims arising under the Employee Retirement Income Security
Act of 1974, the Civil Rights Acts of 1866 and 1867, Title VII of the Civil
Rights Act of 1964, as amended, the Civil Rights and Women’s Equity Act of 1991,
Sections 1981 through 1988 of Title 42 of the United

 

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States Code, as amended, the Occupational Safety and Health Act of 1970, the
Consolidated Omnibus Budget Reconciliation Act of 1985, the Family and Medical
Leave Act of 1993, the Worker Adjustment and Retraining Notification Act of
1988, the Vocational Rehabilitation Act of 1973, the Equal Pay Act of 1963, the
Americans with Disabilities Act, the Fair Labor Standards Act and the National
Labor Relations Act, as amended, the California Fair Employment and Housing Act,
the California Unruh Civil Rights Act, the California Equal Pay Law, any other
federal or state anti-discrimination law or any local or municipal ordinance
relating to discrimination in employment or human rights and under the common
law;

 

  (e) any and all claims for salary, bonus, severance pay, pension, vacation
pay, life insurance, health or medical insurance, or any other fringe benefits,
other than the payments and benefits provided for in or in accordance with the
Agreement;

 

  (f) any and all claims arising out of any other laws and regulations relating
to employment or employment discrimination; and

 

  (g) any and all claims for attorneys’ fees and costs.

 

The Executive acknowledges that he may hereafter discover claims or facts in
addition to or different from those which he now knows or believes to exist with
respect to the subject matter of this Release and which, if known or suspected
at the time of executing this Release, may have materially affected this Release
or his decision to enter into it. Nevertheless, the Executive hereby waives any
right, claim, or cause of action that might arise as a result of such different
or additional claims or facts and Executive hereby expressly waives any and all
rights and benefits conferred upon Executive by the provisions of Section 1542
of the Civil Code of the State of California, which provides as follows:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

 

Each of the parties, being aware of the foregoing California statute, agrees to
expressly waive any rights the party may have thereunder, as well as under any
other statute or common law principles of similar effect.

 

2. ADEA RELEASE: In recognition of the consideration provided in the Agreement,
the Executive hereby releases and discharges the Released Parties from any and
all claims, actions and causes of action that he may have against the Released
Parties arising under the U.S. Age Discrimination in Employment Act of 1967, as
amended, and the applicable rules and regulations promulgated thereunder
(“ADEA”).

 

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The Executive acknowledges that he understands that ADEA is a federal statute
that prohibits discrimination on the basis of age in employment, benefits and
benefit plans.

 

By signing this Release, the Executive hereby acknowledges and confirms the
following:

 

  (a) He is providing the release and discharge set forth in this Section 2 in
exchange for consideration in addition to anything of value to which he is
already entitled.

 

  (b) He was hereby advised by the Company in writing to consult with an
attorney of his choice prior to signing this Release and to have such attorney
explain to his the terms of this Release including, without limitation, the
terms relating to his release of claims arising under ADEA.

 

  (c) He has read this Release carefully and completely and understands each of
the terms thereof.

 

  (d) He is aware that he has twenty-one days in which to consider the terms of
this Release, which the Executive has knowingly and voluntarily waived by
accepting the terms of the offer as described herein. For a period of seven days
following his acceptance hereof, the Executive has the right to revoke the
release contained in this Section 2 (the “Revocation Period”) commencing
immediately following the date he signs and delivers this Release to the
Company. The Revocation Period shall expire at 5:00 p.m. E.S.T. on the last day
of the Revocation Period; provided, however, that if such seventh day is not a
business day, the Revocation Period shall extend to 5:00 p.m. on the next
succeeding business day. No such revocation by shall be effective unless it is
in writing and signed by the Executive and received by the Company prior to the
expiration of the Revocation Period.

 

As set forth in section 7(f)(1)(C) of the ADEA, as added by the Older Workers
Benefit Protection Act of 1990, Executive understands that Executive is not
waiving any rights or claims provided under ADEA that may arise after this
Agreement is executed by Executive.

 

3. CONTINUING OBLIGATIONS: This Release shall not supersede any continuing
obligations the Executive has under the terms of the Agreement. Both of the
parties agree that nothing in this Release shall in any way be construed to
affect either party’s rights under any applicable indemnification agreement or
insurance policy and nothing contained herein shall be interpreted in an
applicable manner so as to violate any provision of such agreement or policy.

 

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4. CHOICE OF LAW: This Release and the rights and obligations of the parties
hereunder shall be governed by and construed and enforced in accordance with the
laws of the State of California, without regard to principles of conflict of
laws.

 

[SIGNATURE PAGE ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the Company and the Executive, intending to be legally
bound, have executed this Release on the day and year first above written.

 

ST Assembly Test Services Ltd.

By:   /s/ Tan Lay Koon    

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Name: Tan Lay Koon

Title: President and Chief Executive Officer

 

CHIPPAC, Inc.

By:   /s/ Dennis Daniels    

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Name: Dennis Daniels

Title: VP Human Resources

 

DENNIS MCKENNA

/s/ Dennis McKenna

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