Document:

exv10w27w2

 

Exhibit 10.27.2

EXECUTION VERSION

AMENDED AND RESTATED NOTE PURCHASE AGREEMENT

among

CAPITALSOURCE FUNDING II TRUST,

as Issuer

CS FUNDING II DEPOSITOR LLC,

as Depositor

CAPITALSOURCE FINANCE LLC,

as Loan Originator

and

CITIGROUP GLOBAL MARKETS REALTY CORP.,

as Purchaser

Dated as of September 17, 2003 and Amended and Restated as of October 7, 2004

COMMERCIAL LOAN BACKED NOTES

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I
	 	 	 	 
	DEFINITIONS
	 	 	 	 
	SECTION 1.01 Certain Defined Terms
	 	 	4	 
	SECTION 1.02 Other Definitional Provisions
	 	 	6	 
	ARTICLE II
	 	 	 	 
	CLOSING AND PURCHASES OF ADDITIONAL NOTE PRINCIPAL BALANCES
	 	 	 	 
	SECTION 2.01 Closing
	 	 	6	 
	SECTION 2.02 Requests for Purchases of Additional Note Principal
Balances; Reductions in Note Principal Balance
	 	 	7	 
	ARTICLE III
	 	 	 	 
	TRANSFER DATES
	 	 	 	 
	SECTION 3.01 Transfer Dates
	 	 	7	 
	ARTICLE IV
	 	 	 	 
	CONDITIONS PRECEDENT
	 	 	 	 
	SECTION 4.01 Closing Subject to Conditions Precedent
	 	 	9	 
	SECTION 4.02 Conditions Precedent to Amendment and Restatement
	 	 	10	 
	ARTICLE V
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE DEPOSITOR
	 	 	 	 
	SECTION 5.01 Representations and Warranties
	 	 	11	 
	SECTION 5.02 Securities Act
	 	 	13	 
	SECTION 5.03 No Fee
	 	 	14	 
	SECTION 5.04 Information
	 	 	14	 
	SECTION 5.05 The Purchased Notes
	 	 	14	 
	SECTION 5.06 Use of Proceeds
	 	 	14	 
	SECTION 5.07 The Depositor
	 	 	14	 
	SECTION 5.08 Taxes, etc
	 	 	14	 
	SECTION 5.09 Financial Condition
	 	 	14	 
	ARTICLE VI
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE PURCHASER
	 	 	 	 
	SECTION 6.01 Representations and Warranties
	 	 	15	 

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	ARTICLE VII
	 	 	 	 
	COVENANTS OF THE ISSUER AND THE DEPOSITOR
	 	 	 	 
	SECTION 7.01 Information from the Issuer
	 	 	16	 
	SECTION 7.02 Access to Information
	 	 	17	 
	SECTION 7.03 Ownership and Security Interests; Further Assurances
	 	 	17	 
	SECTION 7.04 Covenants
	 	 	17	 
	SECTION 7.05 Amendments
	 	 	17	 
	SECTION 7.06 With Respect to the Exempt Status of the Purchased Notes
	 	 	17	 
	ARTICLE VIII
	 	 	 	 
	ADDITIONAL COVENANTS
	 	 	 	 
	SECTION 8.01 Legal Conditions to Closing
	 	 	18	 
	SECTION 8.02 Mutual Obligations
	 	 	18	 
	SECTION 8.03 Restrictions on Transfer
	 	 	18	 
	ARTICLE IX
	 	 	 	 
	INDEMNIFICATION
	 	 	 	 
	SECTION 9.01 Indemnification of Purchaser
	 	 	18	 
	ARTICLE X
	 	 	 	 
	LIMITED RECOURSE
	 	 	 	 
	SECTION 10.01 Limited Recourse
	 	 	19	 
	ARTICLE XI
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	SECTION 11.01 Amendments
	 	 	19	 
	SECTION 11.02 Notices
	 	 	19	 
	SECTION 11.03 No Waiver; Remedies
	 	 	19	 
	SECTION 11.04 Binding Effect; Assignability
	 	 	19	 
	SECTION 11.05 Provision of Documents and Information
	 	 	20	 
	SECTION 11.06 GOVERNING LAW; JURISDICTION
	 	 	20	 
	SECTION 11.07 No Proceedings
	 	 	21	 
	SECTION 11.08 Execution in Counterparts
	 	 	21	 
	SECTION 11.09 No Recourse - Purchaser and Depositor
	 	 	21	 
	SECTION 11.10 Survival
	 	 	21	 
	SECTION 11.11 Tax Characterization
	 	 	21	 
	SECTION 11.12 Conflicts
	 	 	22	 
	SECTION 11.13 Limitation on Liability
	 	 	22	 
	SECTION 11.14 Amendment and Restatement
	 	 	22	 

 ii 

 

 

	 	 	 
	Schedule I

	 	Information for Notices
	Exhibit A

	 	Form of Certificate from Closing Attorney
	Exhibit B

	 	Incremental Note

 iii 

 

 

AMENDED AND RESTATED NOTE PURCHASE AGREEMENT

          AMENDED AND RESTATED NOTE PURCHASE AGREEMENT dated as of September 17,
2003 and amended and restated as of October 7, 2004 (as amended, supplemented
and otherwise modified from time to time, the “Note Purchase Agreement”), among
CapitalSource Funding II Trust (the “Issuer”), CS Funding II Depositor LLC (the
“Depositor”), CapitalSource Finance LLC (“CapitalSource”) and Citigroup Global
Markets Realty Corp. (“Citigroup,” and in its capacity as Purchaser hereunder,
the “Purchaser”).

          The parties hereto agree as follows:

ARTICLE I

DEFINITIONS

          SECTION 1.01 Certain Defined Terms. Capitalized terms used herein
without definition shall have the meanings set forth in the Indenture and the
Sale and Servicing Agreement (as defined below). Additionally, the following
terms shall have the following meanings:

          “Amended and Restated Note” shall mean the Amended and Restated
Note in the principal amount of Six Hundred Million Dollars ($600,000,000.00),
executed by the Issuer in favor of the Purchaser.

          “Closing” shall have the meaning set forth in Section 2.01.

          “Closing Date” shall have the meaning set forth in Section 2.01.

          “Commitment Fee” shall mean, with respect to the Closing Date, the
commitment fee payable to the Purchaser on the Closing Date equal to (a) 35
basis points (0.35%) multiplied by (b) $400,000,000, such payment to be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim.

          “Confidential Information” means all marketing information,
financial information, terms sheets and other information concerning the
transactions contemplated thereby, prepared by the Purchaser and its
Affiliates.

          “Eligible Loan” shall have the meaning set forth in the Sale and
Servicing Agreement.

          “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

          “Governmental Actions” means any and all consents, approvals,
permits, orders, authorizations, waivers, exceptions, variances, exemptions or
licenses of, or registrations, declarations or filings with, any Governmental
Authority required under any Governmental Rules.

          “Governmental Authority” means the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory

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or administrative functions of or
pertaining to government and having jurisdiction over the applicable Person.

          “Governmental Rules” means any and all laws, statutes, codes,
rules, regulations, ordinances, orders, writs, decrees and injunctions, of any
Governmental Authority and any and all legally binding conditions, standards,
prohibitions, requirements and judgments of any Governmental Authority.

          “Incremental Commitment Fee” shall mean, with respect to the
effective date of the amendment and restatement of this Note Purchase
Agreement, an amount equal to thirty five (35) basis points (0.35%) multiplied
by Two Hundred Million Dollars ($200,000,000), such payment to be made in
Dollars in immediately available funds, without deduction, set-off or
counterclaim.

          “Incremental Note” means a note in the maximum principal amount of
Sixty Million Dollars, substantially in the form of Exhibit B hereto, issued by
the Issuer to the Purchaser. The Incremental Note will evidence the increase
in the commitment and will be equally and ratably secured with all Notes issued
pursuant to the terms of the Basic Documents. The Incremental Note represents
the CIG Allocated Principal Balance.

          “Indemnified Party” means the Purchaser and any of its officers,
directors, employees, agents, representatives, assignees and Affiliates and any
Person who controls the Purchaser or its Affiliates within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act.

          “Indenture” means the Indenture dated as of September 17, 2003
among the Issuer as Issuer and Wells Fargo Bank, National Association as
Indenture Trustee as the same may be amended and supplemented from time to
time.

          “Investment Company Act” shall have the meaning provided in Section
5.01(i).

          “Lien” means, with respect to any asset, (a) any mortgage, lien,
pledge, charge, security interest, hypothecation, option or encumbrance of any
kind in respect of such asset or (b) the interest of a vendor or lessor under
any conditional sale agreement, financing lease or other title retention
agreement relating to such asset.

          “Loan Originator” means CapitalSource, as originator of the Loans.

          “Maximum Note Principal Balance” means an amount equal to Six
Hundred Million Dollars ($600,000,000), less any reductions pursuant to Section
2.05 of the Sale and Servicing Agreement. In addition, with respect to the
Incremental Note, the Maximum Note Principal Balance shall be increased by 60%
of the then outstanding principal balance of the CIG Underlying Loans on the
related Transfer Date, and thereafter, the Maximum Note Principal Balance shall
be increased by the then outstanding principal balance of the Incremental Note.

          “Purchaser” means the Purchaser and its permitted successors and
assigns.

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          “Purchased Notes” means the CapitalSource Funding II Trust
Commercial Loan Backed Notes issued by the Issuer pursuant to the Indenture.

          “Sale and Servicing Agreement” means the Amended and Restated Sale
and Servicing Agreement dated as of September 17, 2003 and amended and restated
as of October 7, 2004, among the Issuer, the Depositor, the Loan Originator,
the Servicer and Wells Fargo Bank, National Association as Indenture Trustee,
Collateral Custodian and Backup Servicer, as the same may be amended, modified
or supplemented from time to time.

          “Servicer” means CapitalSource Finance LLC or its permitted
successors and assigns.

          SECTION 1.02 Other Definitional Provisions.

          (a) All terms defined in this Note Purchase Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.

          (b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.01, and accounting terms partially defined in Section 1.01 to the extent not
defined, shall have the respective meanings given to them under generally
accepted accounting principles. To the extent that the definitions of
accounting terms herein are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained herein
shall control.

          (c) The words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Note Purchase Agreement shall refer to this Note
Purchase Agreement as a whole and not to any particular provision of this Note
Purchase Agreement; and Section, subsection, Schedule and Exhibit references
contained in this Note Purchase Agreement are references to Sections,
subsections, and Exhibits in or to this Note Purchase Agreement unless
otherwise specified.

ARTICLE II

CLOSING AND PURCHASES OF

ADDITIONAL NOTE PRINCIPAL BALANCES

          SECTION 2.01 Closing. The closing (the “Closing”) of the
execution of the Basic Documents shall take place at 10:00 a.m. at the offices
of Thacher Proffitt & Wood LLP, Two World Financial Center, New York, New York
10281 on September 17, 2003, or if the conditions to closing set forth in
Section 4.01 of this Note Purchase Agreement shall not have been satisfied or
waived by such date, as soon as practicable after such conditions shall have
been satisfied or waived, or at such other time, date and place as the parties
shall agree upon (the date of the Closing being referred to herein as the
“Closing Date”). On the Closing Date the Purchaser shall have received
the Commitment Fee in immediately available
funds, in accordance with the Purchaser’s wiring instructions. On the
effective date of the amendment and restatement of this Note Purchase
Agreement, the Purchaser shall have received the Incremental

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Commitment Fee in
immediately available funds and in accordance with the Purchase’s wiring
instructions.

          SECTION 2.02 Requests for Purchases of Additional Note Principal
Balances; Reductions in Note Principal Balance. (a) At any time during the
Revolving Period no later than 12:00 p.m. New York time at least one (1)
Business Day prior to a proposed Transfer Date, to the extent that the
aggregate outstanding Note Principal Balance of the Purchased Notes (after
giving effect to the proposed purchase) is less than the Maximum Note Principal
Balance, and subject to the terms and conditions hereof and in accordance with
the other Basic Documents, the Issuer may request that the Purchaser purchase
Additional Note Principal Balances (each such request, a “Notice of Additional
Note Principal Balance”) in the form attached as Exhibit A to the Sale and
Servicing Agreement. In addition, in connection with such Notice of Additional
Note Principal Balance the Issuer shall deliver or cause the delivery of (i) a
Borrowing Base Certificate in the form attached as Exhibit F to the Sale and
Servicing Agreement, and a Loan Schedule, (ii) a copy of the S&SA Assignment
executed by the Depositor and the Issuer with respect to the Eligible Loans
proposed as Collateral for such Additional Note Principal Balance, (iii) a copy
of the LPA Assignment executed by the Loan Originator and the Depositor and
(iv) such additional information as may be reasonably requested by the
Purchaser.

          (b) In addition, the Issuer shall or shall cause the Servicer to deliver
to the Collateral Custodian (i) no later than 12:00 p.m. New York time on the
Business Day prior to the Transfer Date, by facsimile transmission or in an
electronic format mutually agreed upon by the Servicer and the Collateral
Custodian, a copy of the duly executed original Underlying Notes of the
Eligible Loans and the related Assignments of Mortgage (if any) and, if any
Loans are closed in escrow, a certificate (in the form of Exhibit A) from the
closing attorneys of such Eligible Loans certifying the possession of the
Required Loan Documents; provided, however, notwithstanding the foregoing, the
Required Loan Documents (including any UCCs included in the Required Loan
Documents) shall be in the possession of the Collateral Custodian within two
(2) Business Days of any related Transfer Date as to such Loans.

          On the identified Transfer Date, the Purchaser may (in the exercise of its
sole and absolute discretion) purchase the Additional Note Principal Balances
requested in the Notice of Additional Note Principal Balance, subject to the
terms and conditions and in reliance upon the covenants, representations and
warranties set forth herein and in the other Basic Documents.

ARTICLE III

TRANSFER DATES

          SECTION 3.01 Transfer Dates.

          (a) Subject to the conditions and terms set forth herein and in Section
2.06 of the Sale and Servicing Agreement with respect to each Transfer Date,
the Purchaser’s purchase of Additional Note Principal Balances shall be subject
to the satisfaction, as of the applicable Transfer Date, of each of the
following additional conditions:

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          (i) With respect to the initial Transfer Date only, the Purchaser
shall have received the Commitment Fee and, with respect to any Transfer
Date occurring after the effective date of the amendment and restatement
of this Note Purchase Agreement, the Purchaser shall have received the
Incremental Commitment Fee;

          (ii) Each document required to be provided pursuant to Section 2.02
hereof shall have been provided to the Purchaser;

          (iii) Each condition set forth in Section 2.06 of the Sale and
Servicing Agreement shall have been satisfied;

          (iv) Each of the representations and warranties of the Issuer, the
Servicer, the Loan Originator and the Depositor made in the Basic
Documents shall be true and correct as of such date (except to the extent
they expressly relate to an earlier or later time);

          (v) The Issuer, the Servicer, the Loan Originator and the Depositor
shall be in compliance with all of their respective covenants contained
in the Basic Documents and the Purchased Notes, including, without
limitation, the financial covenants contained in Section 7.01 of the Sale
and Servicing Agreement;

          (vi) No Event of Default or Default shall have occurred and be
continuing; and

          (vii) With respect to each Transfer Date other than the initial
Transfer Date, the Purchaser shall have received evidence reasonably
satisfactory to it of the completion of all recordings, registrations,
and filings as may be necessary or, in the reasonable opinion of the
Purchaser, desirable to perfect or evidence the assignments required to
be effected on such Transfer Date in accordance with the Sale and
Servicing Agreement including, without limitation, the assignment of the
Loans and the proceeds thereof required to be assigned pursuant to the
related LPA Assignment, S&SA Assignment and the Indenture.

          (b) The Purchaser shall determine in its reasonable discretion whether
each of the above conditions have been met and its determination shall be
binding on the parties hereto.

          (c) The price paid by the Purchaser on each Transfer Date for the
Additional Note Principal Balance purchased on such Transfer Date shall be
equal to the amount of such Additional Note Principal Balance, and shall be
remitted not later than 5:00 p.m. New York City time on the Transfer Date by
wire transfer of immediately available funds to or at the direction of the Loan
Originator on behalf of the Issuer.

          (d) The Purchaser shall record on the schedule attached to the Purchased
Notes, the date and amount of any Additional Note Principal Balance purchased
by it; provided, that failure to make such recordation on such schedule
or any error in such schedule shall not adversely affect the Purchaser’s rights
with respect to its Note Principal Balance and its right to receive interest
payments in respect of the Note Principal Balance actually held. Absent
manifest error, the Note Principal Balance of the Purchased Notes as set
forth in the Purchaser’s

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records shall be binding upon the parties hereto,
notwithstanding any notation or record made or kept by any other party hereto.

ARTICLE IV

CONDITIONS PRECEDENT

          SECTION 4.01 Closing Subject to Conditions Precedent. The Closing
of the Basic Documents is subject to the satisfaction at the time of the
Closing of the following conditions (any or all of which may be waived by the
Purchaser in its sole discretion):

          (a) Payment of Commitment Fee. The Purchaser shall have received
the full amount of the Commitment Fee, in immediately available funds, in
accordance with the Purchaser’s wiring instructions.

          (b) Performance by the Issuer, the Depositor, the Servicer and the Loan
Originator. All the terms, covenants, agreements and conditions of the
Basic Documents to be complied with and performed by the Issuer, the Depositor,
the Servicer and the Loan Originator on or before the Closing Date shall have
been complied with and performed in all material respects.

          (c) Representations and Warranties. Each of the representations
and warranties of the Issuer, the Depositor, the Servicer and the Loan
Originator made in the Basic Documents shall be true and correct in all
material respects as of the Closing Date (except to the extent they expressly
relate to an earlier or later time).

          (d) Officer’s Certificate. The Purchaser shall have received in
form and substance reasonably satisfactory to the Purchaser an Officer’s
Certificate from the Loan Originator, the Depositor and the Servicer and a
certificate of an Authorized Officer of the Issuer, dated the Closing Date,
certifying to the satisfaction of the conditions set forth in the preceding
paragraphs (b) and (c).

          (e) Opinions of Counsel to the Issuer, the Loan Originator, the
Servicer and the Depositor. Counsel to the Issuer, the Loan Originator,
the Servicer and the Depositor shall have delivered to the Purchaser opinions,
dated as of the Closing Date and reasonably satisfactory in form and substance
to the Purchaser and its counsel. In addition to the foregoing, the Loan
Originator shall have caused its counsel to deliver to the Purchaser an opinion
to the effect that the Issuer will not be treated as an association (or
publicly traded partnership) taxable as a corporation or as a taxable mortgage
pool, for federal income tax purposes.

          (f) Opinions of Counsel to the Indenture Trustee. Counsel to the
Indenture Trustee shall have delivered to the Purchaser a favorable opinion,
dated as of the Closing Date and reasonably satisfactory in form and substance
to the Purchaser and its counsel.

          (g) Opinions of Counsel to the Owner Trustee. Delaware counsel to
the Owner Trustee of the Issuer shall have delivered to the Purchaser favorable
opinions regarding the formation, existence and standing of the Issuer and of
the Issuer’s execution,
authorization and delivery of each of the Basic Documents to which it is a
party and such other matters as the

9

 

Purchaser may reasonably request, dated as
of the Closing Date and reasonably satisfactory in form and substance to the
Purchaser and its counsel.

          (h) Filings and Recordations. Within ten (10) days of the Closing
Date and on or prior to each Transfer Date, the Purchaser shall have received
evidence reasonably satisfactory to it of (i) the completion of all recordings,
registrations, and filings as may be necessary or, in the reasonable opinion of
the Purchaser, desirable to perfect or evidence the assignment by the Loan
Originator to the Depositor of the Loan Originator’s ownership interest in the
Trust Estate including, without limitation, the Eligible Loans conveyed
pursuant to the Loan Sale Agreement and the proceeds thereof, (ii) the
completion of all recordings, registrations and filings as may be necessary or,
in the reasonable opinion of the Purchaser, desirable to perfect or evidence
the assignment by the Depositor to the Issuer of the Depositor’s ownership
interest in the Collateral including, without limitation, the Loans, the Loan
Collateral and the proceeds thereof, (iii) the completion of all recordings,
registrations, and filings as may be necessary or, in the reasonable opinion of
the Purchaser, desirable to perfect or evidence the grant of a first priority
perfected security interest in the Issuer’s ownership interest in the
Collateral including, without limitation, the Loans, in favor of the Indenture
Trustee, subject to no Liens prior to the Lien of the Indenture, and (iv)
evidence satisfactory to the Purchaser of the transfer of the Required Equity
Contribution by the Depositor to the Issuer.

          (i) Documents. The Purchaser shall have received a duly executed
counterpart of each of the Basic Documents, in form acceptable to the
Purchaser, the Purchased Notes and each and every document or certification
delivered by any party in connection with any of the Basic Documents or the
Purchased Notes, and each such document shall be in full force and effect.

          (j) Actions or Proceedings. No action, suit, proceeding or
investigation by or before any Governmental Authority shall have been
instituted to restrain or prohibit the consummation of, or to invalidate, any
of the transactions contemplated by the Basic Documents, the Purchased Notes
and the documents related thereto in any material respect.

          (k) Approvals and Consents. All Governmental Actions of all
Governmental Authorities required with respect to the transactions contemplated
by the Basic Documents, the Purchased Notes and the documents related thereto
shall have been obtained or made.

          (l) Accounts. The Purchaser shall have received evidence
reasonably satisfactory to it that each Trust Account has each been established
in accordance with the terms of the Sale and Servicing Agreement.

          (m) Reserved.

          (n) Other Documents. The Issuer, the Loan Originator, the
Depositor and the Servicer shall have furnished to the Purchaser such other
opinions, information, certificates and documents as the Purchaser may
reasonably request.

          (o) Proceedings in Contemplation of Sale of Purchased Notes. All
actions and proceedings undertaken by the Issuer, the Loan Originator, the
Depositor and the Servicer in

10

 

connection with the issuance and sale of the
Purchased Notes as herein contemplated shall be satisfactory in all respects to
the Purchaser and its counsel.

          (p) Financial Covenants. The Loan Originator shall be in compliance
with the financial covenants set forth in Section 7.01 of the Sale and
Servicing Agreement.

          If any condition specified in this Section 4.01 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Purchaser by notice to the Loan Originator at any time at or
prior to the Closing Date, and the Purchaser shall incur no liability as a
result of such termination.

          SECTION 4.02 Conditions Precedent to Amendment and Restatement.
The effectiveness of the amendment and restatement of this Note Purchase
Agreement is subject to the satisfaction of the following conditions (any or
all of which may be waived by the Purchaser in its sole discretion):

          (a) Payment of Incremental Commitment Fee. The Purchaser shall
have received the full amount of the Incremental Commitment Fee, in immediately
available funds, in accordance with the Purchaser’s wiring instructions.

          (b) Delivery of Amended and Restated Sale and Servicing Agreement and
Amended and Restated Note. The Purchaser shall have received a duly
executed counterpart of the Sale and Servicing Agreement and a duly executed
Amended and Restated Note.

          (c) Other Conditions Precedent. The Purchaser shall have satisfied
the conditions precedent set forth in paragraphs (b), (c), (d), (e), (h), (j),
(k), (n), (o) and (p) of Section 4.01 hereof with respect to and as of the
proposed date of the amendment and restatement.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF

THE ISSUER AND THE DEPOSITOR

          SECTION 5.01 Representations and Warranties. The Issuer and the
Depositor hereby jointly and severally make the following representations and
warranties to the Purchaser, as of the Closing Date, and as of each Transfer
Date, and the Purchaser shall be deemed to have relied on such representations
and warranties in making purchases of Additional Note Principal Balances on
each Transfer Date:

          (a) The Issuer has been duly organized and is validly existing and in good
standing as a statutory trust under the laws of the State of Delaware, with
requisite trust power and authority to own its properties and to transact the
business in which it is now engaged, and is duly qualified to do business and
is in good standing (or is exempt from such requirements) in each State of the
United States where the nature of its business requires it to be so qualified
and
the failure to be so qualified and in good standing would reasonably be
expected to have a material adverse effect on the Issuer or any adverse effect
on the interests of the Purchaser.

11

 

          (b) The issuance, sale, assignment and conveyance of the Purchased Notes
and the Additional Note Principal Balances, the performance of the Issuer’s
obligations under each Basic Document to which it is a party and the
consummation of the transactions therein contemplated will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any Lien (other than
any Lien created by the Basic Documents), charge or encumbrance upon any of the
property or assets of the Issuer or any of its Affiliates pursuant to the terms
of, any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it or any of its Affiliates is bound or to which any of
its property or assets is subject, nor will such action result in any violation
of the provisions of its organizational documents or any Governmental Rule
applicable to the Issuer, in each case which could reasonably be expected to
have a material adverse effect on the transactions contemplated therein.

          (c) No Governmental Action which has not been obtained is required by or
with respect to the Issuer in connection with the execution and delivery to the
Purchaser of the Purchased Notes. No Governmental Action which has not been
obtained is required by or with respect to the Issuer in connection with the
execution and delivery of any of the Basic Documents to which the Issuer is a
party or the consummation by the Issuer of the transactions contemplated
thereby except for any requirements under state securities or “blue sky” laws
in connection with any transfer of the Purchased Notes.

          (d) The Issuer possesses all material licenses, certificates, authorities
or permits issued by the appropriate state, federal or foreign regulatory
agencies or bodies necessary to conduct the business now operated by it, and
has not received any notice of proceedings relating to the revocation or
modification of any such license, certificate, authority or permit which,
singly or in the aggregate, would reasonably be expected to materially and
adversely affect its condition, financial or otherwise, or its earnings,
business affairs or business prospects.

          (e) Each of the Basic Documents to which the Issuer is a party has been
duly authorized, executed and delivered by the Issuer and is a valid and
legally binding obligation of the Issuer, enforceable against the Issuer in
accordance with its terms, subject to enforcement of bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors’ rights and to general principles of equity.

          (f) The execution, delivery and performance by the Issuer of each of its
obligations under each of the Basic Documents to which it is a party will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any agreement or instrument to which the Issuer is
a party or by which the Issuer is bound or to which any of its properties are
subject or of any statute, order or regulation applicable to the Issuer of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over the Issuer or any of its properties, in each case which could
reasonably be expected to have a material adverse effect on any of the
transactions contemplated therein.

          (g) The Issuer is not in violation of its organizational documents or in
default under any agreement, indenture or instrument the effect of which
violation or default would be
material to the Issuer or the transactions contemplated by the Basic
Documents. The Issuer is not a party to, bound by or in breach or violation of
any indenture or other agreement or

12

 

instrument, or subject to or in violation
of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the Issuer
that would reasonably be expected to materially and adversely affect (i) the
ability of the Issuer to perform its obligations under any of the Basic
Documents to which it is a party or (ii) the business, operations, financial
condition, properties, assets or prospects of the Issuer.

          (h) There are no actions or proceedings against, or investigations of, the
Issuer pending, or, to the knowledge of the Issuer threatened, before any
Governmental Authority, court, arbitrator, administrative agency or other
tribunal (i) asserting the invalidity of any of the Basic Documents, or (ii)
seeking to prevent the issuance of the Purchased Notes or the consummation of
any of the transactions contemplated by the Basic Documents or the Purchased
Notes, or (iii) that could reasonably be expected to materially and adversely
affect the business, operations, financial condition, properties, assets or
prospects of the Issuer or the validity or enforceability of, or the
performance by the Issuer of its respective obligations under, any of the Basic
Documents to which it is a party or (iv) seeking to affect adversely the income
tax attributes of the Purchased Notes.

          (i) The Issuer is not, and neither the issuance and sale of the Purchased
Notes to the Purchaser nor the activities of the Issuer pursuant to the Basic
Documents, shall render the Issuer an “investment company” or under the
“control” of an “investment company” as such terms are defined in the
Investment Company Act of 1940, as amended (the “Investment Company
Act”).

          (j) It is not necessary to qualify the Indenture under the Trust Indenture
Act of 1939, as amended.

          (k) The Issuer is solvent and has adequate capital for its business and
undertakings.

          (l) The chief executive offices of the Issuer are located at c/o
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890, or, with the consent of the Purchaser, such other
address as shall be designated by the Issuer in a written notice to the other
parties hereto.

          (m) There are no contracts, agreements or understandings between the
Issuer and any Person granting such Person the right to require the filing at
any time of a registration statement under the Act with respect to the
Purchased Notes.

          SECTION 5.02 Securities Act. Assuming the accuracy of the
representations and warranties of and compliance with the covenants of the
Purchaser, contained herein, the sale of the Purchased Notes and the sale of
Additional Note Principal Balances pursuant to this Agreement are each exempt
from the registration and prospectus delivery requirements of the Act. In the
case of the offer or sale of the Purchased Notes, no form of general
solicitation or general advertising was used by the Issuer, any Affiliates of
the Issuer or any person acting on its or their behalf, including, but not
limited to, advertisements, articles, notices or other communications published
in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
Neither the Issuer, any Affiliates of the Issuer nor any Person

13

 

acting on its
or their behalf has offered or sold, nor will the Issuer or any Person acting
on its behalf offer or sell directly or indirectly, the Purchased Notes or any
other security in any manner that, assuming the accuracy of the representations
and warranties and the performance of the covenants given by the Purchaser and
compliance with the applicable provisions of the Indenture with respect to each
transfer of the Purchased Notes, would render the issuance and sale of the
Purchased Notes as contemplated hereby a violation of Section 5 of the
Securities Act or the registration or qualification requirements of any state
securities laws, nor has any such Person authorized, nor will it authorize, any
Person to act in such manner.

          SECTION 5.03 No Fee. Neither the Issuer, nor the Depositor, nor
any of their Affiliates has paid or agreed to pay to any Person any
compensation for soliciting another to purchase the Purchased Notes.

          SECTION 5.04 Information. The information provided pursuant to
Section 7.01(a) hereof will, at the date thereof, be true and correct in all
material respects.

          SECTION 5.05 The Purchased Notes. The Purchased Notes have been
duly and validly authorized, and, when executed and authenticated in accordance
with the terms of the Indenture, and delivered to and paid for in accordance
with this Note Purchase Agreement, will be duly and validly issued and
outstanding and will be entitled to the benefits of the Indenture.

          SECTION 5.06 Use of Proceeds. No proceeds of a purchase hereunder
will be used (i) for a purpose that violates or would be inconsistent with
Regulations T, U or X promulgated by the Board of Governors of the Federal
Reserve System from time to time or (ii) to acquire any security in any
transaction in violation of Section 13 or 14 of the Exchange Act.

          SECTION 5.07 The Depositor. The Depositor hereby makes to the
Purchaser each of the representations, warranties and covenants set forth in
Section 3.01 of the Sale and Servicing Agreement as of the Closing Date and as
of each Transfer Date (except to the extent that any such representation,
warranty or covenant is expressly made as of another date).

          SECTION 5.08 Taxes, etc. Any taxes, fees and other charges of
Governmental Authorities applicable to the Issuer and the Depositor, except for
franchise or income taxes, in connection with the execution, delivery and
performance by the Issuer and the Depositor of each Basic Document to which
they are parties, the issuance of the Purchased Notes or otherwise applicable
to the Issuer or the Depositor in connection with the Trust Estate have been
paid or will be paid by the Issuer or the Depositor, as applicable, at or prior
to the Closing Date or Transfer Date, to the extent then due.

          SECTION 5.09 Financial Condition. On the date hereof and on each
Transfer Date, neither the Issuer nor the Depositor is subject to a Bankruptcy
Event or has reason to believe that its insolvency is imminent.

14

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

WITH RESPECT TO THE PURCHASER

          SECTION 6.01 Representations and Warranties. The Purchaser hereby
makes the following representations and warranties, as to itself, to the Issuer
and the Depositor on which the same are relying in entering into this Note
Purchase Agreement.

          (a) Organization. The Purchaser has been duly organized and is
validly existing and in good standing under the laws of the jurisdiction of its
organization with power and authority to own its properties and to transact the
business in which it is now engaged.

          (b) Authority, etc. The Purchaser has all requisite power and
authority to enter into and perform its obligations under this Note Purchase
Agreement and to consummate the transactions herein contemplated. The
execution and delivery by the Purchaser of this Note Purchase Agreement and the
consummation by the Purchaser of the transactions contemplated hereby have been
duly and validly authorized by all necessary organizational action on the part
of the Purchaser. This Note Purchase Agreement has been duly and validly
executed and delivered by the Purchaser and constitutes a legal, valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, subject as to enforcement to bankruptcy,
reorganization, insolvency, moratorium and other similar laws of general
applicability relating to or affecting creditors’ rights and to general
principles of equity. Neither the execution and delivery by the Purchaser of
this Note Purchase Agreement nor the consummation by the Purchaser of any of
the transactions contemplated hereby, nor the fulfillment by the Purchaser of
the terms hereof, will conflict with, or violate, result in a breach of or
constitute a default under any term or provision of the Purchaser’s
organizational documents or any Governmental Rule applicable to the Purchaser.

          (c) Institutional Accredited Investor. The Purchaser is an
institutional “accredited investor” within the meaning of subparagraph (a)(1),
(2), (3) or (7) of Rule 501 under the 1933 Act (an “Institutional Accredited
Investor”) that is acquiring the Purchased Notes for its own account or for one
or more accounts (each of which is an Institutional Accredited Investor) as to
each of which it exercises sole investment discretion.

          (d) ERISA. The Purchaser either (i) is not, and not acquiring the
Purchased Notes on behalf of or with the assets of, an employee benefit plan or
other retirement plan or arrangement subject to Title I of ERISA or Section
4975 of the Code, or (b) is, or is acquiring the Purchased Notes on behalf of
or with the assets of, an employee benefit plan or other retirement plan or
arrangement subject to Title I of ERISA of Section 4975 of the Code and the
conditions for exemptive relief under at least one of the following prohibited
transaction class exemptions have been satisfied: Prohibited Transaction Class
Exemption (“PTCE”) 96-23 (relating to transactions effected by an “in-house
asset manager”), PTCE 95-60 (relating to transactions involving insurance
company general accounts), PTCE 91-38 (relating to transactions involving bank
collective investment funds), PTCE 90-1 (relating to transactions involving
insurance company pooled separate accounts), and PTCE 84-14 (relating to
transactions effected by a “qualified professional asset manager”).

15

 

          (e) Securities Act. The Purchaser will acquire the Purchased Notes
pursuant to this Note Purchase Agreement without a view to any public
distribution thereof, and will not offer to sell or otherwise dispose of the
Purchased Notes (or any interest therein) in violation of any of the
registration requirements of the Act or any applicable state or other
securities laws, or by means of any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) and
will comply with the requirements of the Indenture. The Purchaser acknowledges
that it has no right to require the Issuer or any other Person to register the
Purchased Notes under the Securities Act or any other securities law.

          (f) Conflicts With Law. The execution, delivery and performance by
the Purchaser of its obligations under this Note Purchase Agreement will not
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any agreement or instrument to which the Purchaser
is a party or by which the Purchaser is bound or of any statute, order or
regulation applicable to the Purchaser of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Purchaser, in each case which could be expected to have a material adverse
effect on the transactions contemplated therein.

          (g) Conflicts With Agreements, etc. The Purchaser is not in
violation of its organizational documents or in default under any agreement,
indenture or instrument the effect of which violation or default would be
materially adverse to the Purchaser in the performance of its obligations or
duties under any of the Basic Documents to which it is a party. The Purchaser
is not a party to, bound by or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or governmental
body having jurisdiction over the Purchaser that materially and adversely
affects, or which could be expected in the future to materially and adversely
affect the ability of the Purchaser to perform its obligations under this Note
Purchase Agreement.

ARTICLE VII

COVENANTS OF THE ISSUER AND

THE DEPOSITOR

          SECTION 7.01 Information from the Issuer. So long as the Purchased
Notes remain outstanding, the Issuer and the Depositor shall each furnish to
the Purchaser:

          (a) such information (including financial information), documents, records
or reports with respect to the Collateral, including, without limitation, the
Loans and the Loan Collateral, the Issuer, the Loan Originator, the Servicer or
the Depositor as the Purchaser may from time to time reasonably request;

          (b) as soon as possible and in any event within five (5) Business Days
after the occurrence thereof, notice of each Event of Default under the Sale
and Servicing Agreement or the Indenture, and each Default; and

          (c) promptly and in any event within 30 days after the occurrence thereof,
written notice of a change in address of the chief executive office or place of
organization of the Issuer, the Loan Originator or the Depositor.

16

 

          SECTION 7.02 Access to Information. So long as the Purchased Notes
remain outstanding, each of the Issuer and the Depositor shall, on reasonable
request from time to time during regular business hours, permit the Purchaser,
or their agents or representatives to:

          (a) examine all books, records and documents (including computer tapes and
disks) in the possession or under the control of the Issuer or the Depositor
relating to the Eligible Loans or the Basic Documents as may be requested, and

          (b) visit the offices and property of the Issuer and the Depositor for the
purpose of examining such materials described in clause (a) above.

          SECTION 7.03 Ownership and Security Interests; Further Assurances.
The Depositor will take all action reasonably necessary to maintain the
Issuer’s ownership interest in the Loans and the other items sold pursuant to
Article II of the Sale and Servicing Agreement. The Issuer and the Depositor
will take all action necessary to maintain the Indenture Trustee’s security
interest in the Eligible Loans and the other items pledged to the Indenture
Trustee pursuant to the Indenture.

          The Issuer and the Depositor agree to take any and all acts and to execute
any and all further instruments reasonably necessary or requested by the
Purchaser to more fully effect the purposes of this Note Purchase Agreement.

          SECTION 7.04 Covenants. The Issuer and the Depositor shall each
duly observe and perform each of their respective covenants set forth in each
of the Basic Documents to which they are parties.

          SECTION 7.05 Amendments. Neither the Issuer nor the Depositor
shall make, or permit any Person to make, any amendment, modification or change
to, or provide any waiver under any Basic Document to which the Issuer or the
Depositor, as applicable, is a party without the prior written consent of the
Purchaser.

          SECTION 7.06 With Respect to the Exempt Status of the Purchased
Notes.

          (a) Neither the Issuer nor the Depositor, nor any of their respective
Affiliates, nor any Person acting on their behalf will, directly or indirectly,
make offers or sales of any security, or solicit offers to buy any security,
under circumstances that would require the registration of the Purchased Notes
under the Securities Act.

          (b) Neither the Issuer nor the Depositor, nor any of their Affiliates, nor
any Person acting on their behalf will engage in any form of general
solicitation or general advertising (within the meaning of Regulation D
promulgated under the Securities Act) in connection with any offer or sale of
the Purchased Notes.

17

 

ARTICLE VIII

ADDITIONAL COVENANTS

          SECTION 8.01 Legal Conditions to Closing. The parties hereto will
take all reasonable action necessary to obtain (and will cooperate with one
another in obtaining) any consent, authorization, permit, license, franchise,
order or approval of, or any exemption by, any Governmental Authority or any
other Person, required to be obtained or made by it in connection with any of
the transactions contemplated by this Note Purchase Agreement.

          SECTION 8.02 Mutual Obligations. On and after the Closing, each
party hereto will do, execute and perform all such other acts, deeds and
documents as the other party may from time to time reasonably require in order
to carry out the intent of this Note Purchase Agreement.

          SECTION 8.03 Restrictions on Transfer. The Purchaser agrees that
it will comply with the restrictions on transfer of the Purchased Notes set
forth in the Indenture and resell the Purchased Notes only in compliance with
such restrictions.

ARTICLE IX

INDEMNIFICATION

          SECTION 9.01 Indemnification of Purchaser. Each of the Issuer and
the Depositor hereby agree to, jointly and severally, indemnify and hold
harmless each Indemnified Party against any and all losses, claims, damages,
liabilities, expenses or judgments (including accounting fees and reasonable
legal fees and other expenses incurred in connection with this Note Purchase
Agreement or any other Basic Document and any action, suit or proceeding or any
claim asserted) (collectively, “Losses”), as incurred (payable promptly
upon written request), for or on account of or arising from or in connection
with any information prepared by and furnished or to be furnished by any of the
Issuer, the Loan Originator or the Depositor pursuant to or in connection with
the transactions contemplated hereby including, without limitation, such
written information as may have been and may be furnished in connection with
any due diligence investigation with respect to the business, operations,
financial condition of the Issuer, the Loan Originator, the Depositor or with
respect to the Eligible Loans, to the extent such information contains any
untrue statement of material fact or omits to state a material fact necessary
to make the statements contained therein in light of the circumstances under
which such statements were made not misleading, except with respect to any such
information used by such Indemnified Party in violation of the Basic Documents
which results in such Losses; provided, however, that neither the Issuer nor
the Depositor will be liable for any portion of any such amount resulting from
the gross negligence or willful misconduct of any Indemnified Party. The
indemnities contained in this Section 9.01 will be in addition to any liability
which the Issuer or the Depositor may otherwise have pursuant to this Note
Purchase Agreement and any other Basic Document.

18

 

ARTICLE X

LIMITED RECOURSE

          SECTION 10.01 Limited Recourse. At the option of the Purchaser, in
the event that the Required Overcollateralization Amount is not satisfied on
any date of determination, CapitalSource Finance LLC shall be required to remit
to the Indenture Trustee an amount equal to such shortfall for payment to the
Noteholders pursuant to Section 5.01(b)(7) of the Sale and Servicing Agreement.
Such payment shall be applied to reduce the Note Principal Balance of the
Purchased Notes. Notwithstanding the foregoing, in no event shall CapitalSource
Finance LLC be required to make any payment pursuant to this Section 10.01 if
the amount of the payment (or any portion thereof) would cause the aggregate
amount of payments made by CapitalSource Finance LLC pursuant to this Section
10.01 on all prior dates during the term of this Agreement to exceed 10% of the
Note Principal Balance outstanding on such date.

ARTICLE XI

MISCELLANEOUS

          SECTION 11.01 Amendments. No amendment or waiver of any provision
of this Note Purchase Agreement shall in any event be effective unless the same
shall be in writing and signed by all of the parties hereto, and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

          SECTION 11.02 Notices. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telecopies) and mailed, telecopied (with a copy delivered by
overnight courier) or delivered, as to each party hereto, at its address as set
forth in Schedule I hereto or at such other address as shall be designated by
such party in a written notice to the other parties hereto. All such notices
and communications shall be deemed effective upon receipt thereof, and in the
case of telecopies, when receipt is confirmed by telephone.

          SECTION 11.03 No Waiver; Remedies. No failure on the part of any
party hereto to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

          SECTION 11.04 Binding Effect; Assignability.

          (a) This Note Purchase Agreement shall be binding upon and inure to the
benefit of the Issuer, the Depositor and the Purchaser and their respective
permitted successors and assigns (including any subsequent holders of the
Purchased Notes); provided, however, except as provided in clause
(d) below, neither the Issuer nor the Depositor shall have any right to assign
their respective rights hereunder or interest herein (by operation of law or
otherwise) without the prior written consent of the Purchaser.

19

 

          (b) The Purchaser may, in the ordinary course of its business and in
accordance with the Basic Documents and applicable law, including applicable
securities laws, at any time sell to one or more Persons (each, a
“Participant”), participating interests in all or a portion of its
rights and obligations under this Note Purchase Agreement. Notwithstanding any
such sale by the Purchaser of participating interests to a Participant, the
Purchaser’s rights and obligations under this Note Purchase Agreement shall
remain unchanged, the Purchaser shall remain solely responsible for the
performance thereof, and the Issuer and the Depositor shall continue to deal
solely and directly with the Purchaser and shall have no obligations to deal
with any Participant in connection with the Purchaser’s rights and obligations
under this Note Purchase Agreement.

          (c) This Note Purchase Agreement shall create and constitute the
continuing obligation of the parties hereto in accordance with its terms, and
shall remain in full force and effect until such time as all amounts payable
with respect to the Purchased Notes shall have been paid in full.

          (d) The Purchaser may sell or assign the Purchased Note only with the
prior consent of the Loan Originator unless (i) such sale or assignment is to
an Affiliate of the Purchaser, (ii) such sale or assignment occurs during the
continuance of a Trigger Event under the Sale and Servicing Agreement or (iii)
the Depositor or the Loan Originator breaches a representation or warranty
contained in the Sale and Servicing Agreement. In addition, the Purchaser shall
have the right to sell or finance the Purchased Note pursuant to a repurchase,
financing or similar transaction without the consent of the Loan Originator.

          SECTION 11.05 Provision of Documents and Information. Each of the
Issuer and the Depositor acknowledges and agrees that the Purchaser is
permitted to provide to any subsequent Purchaser, permitted assignees and
Participants, opinions, certificates, documents and other information relating
to the Issuer, the Depositor and the Loans delivered to the Purchaser pursuant
to this Note Purchase Agreement provided that with respect to confidential
information, such subsequent Purchaser, permitted assignees and Participants
agree to be bound by Section 13.15 of the Sale and Servicing Agreement.

          SECTION 11.06 GOVERNING LAW; JURISDICTION. THIS NOTE PURCHASE
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS.
EACH OF THE PARTIES TO THIS NOTE PURCHASE AGREEMENT HEREBY AGREES TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND ANY APPELLATE COURT HAVING JURISDICTION TO REVIEW THE JUDGMENTS
THEREOF. EACH OF THE PARTIES HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY
OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.

20

 

          SECTION 11.07 No Proceedings. Until the date that is one year and
one day after the last day on which any amount is outstanding under this Note
Purchase Agreement, the Depositor and the Purchaser hereby covenant and agree
that they will not institute against the Issuer or the Depositor, or join in
any institution against the Issuer or the Depositor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law.

          SECTION 11.08 Execution in Counterparts. This Note Purchase
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which when taken together shall
constitute one and the same agreement.

          SECTION
11.09 No Recourse - Purchaser and Depositor.

          (a) The obligations of the Purchaser under this Note Purchase Agreement,
or any other agreement, instrument, document or certificate executed and
delivered by or issued by the Purchaser or any officer thereof are solely the
partnership or corporate obligations of the Purchaser, as the case may be. No
recourse shall be had for payment of any fee or other obligation or claim
arising out of or relating to this Note Purchase Agreement or any other
agreement, instrument, document or certificate executed and delivered or issued
by the Purchaser or any officer thereof in connection therewith, against any
stockholder, limited partner, employee, officer, director or incorporator of
the Purchaser.

          (b) The obligations of the Depositor under this Note Purchase Agreement,
or any other agreement, instrument, document or certificate executed and
delivered by or issued by the Depositor or any officer thereof are solely the
limited liability company obligations of the Depositor. No recourse shall be
had for payment of any fee or other obligation or claim arising out of or
relating to this Note Purchase Agreement or any other agreement, instrument,
document or certificate executed and delivered or issued by the Purchaser or
any officer thereof in connection therewith, against any member, managing
director, employee or officer of the Depositor.

          (c) The Purchaser, by accepting the Purchased Notes, acknowledges that
such Purchased Notes represent an obligation of the Issuer and do not represent
an interest in or an obligation of the Loan Originator, the Servicer, the
Depositor, the Administrator, the Owner Trustee, the Indenture Trustee or any
Affiliate thereof and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated in this Agreement,
the Purchased Notes or the Basic Documents.

          SECTION 11.10 Survival. All representations, warranties,
covenants, guaranties and indemnifications contained in this Note Purchase
Agreement and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the sale, transfer or repayment
of the Purchased Notes.

          SECTION 11.11 Tax Characterization. Each party to this Note
Purchase Agreement (a) acknowledges and agrees that it is the intent of the
parties to this Note Purchase Agreement that for all purposes, including
federal, state and local income, single
business and franchise tax purposes, the Purchased Notes will be treated
as evidence of indebtedness secured

21

 

by the Loans and proceeds thereof and the
trust created under the Indenture will not be characterized as an association
(or publicly traded partnership) taxable as a corporation, (b) agrees to treat
the Purchased Notes for federal, state and local income and franchise tax
purposes as indebtedness and (c) agrees that the provisions of all Basic
Documents shall be construed to further these intentions of the parties.

          SECTION 11.12 Conflicts. Notwithstanding anything contained herein
to the contrary, in the event of the conflict between the terms of the Sale and
Servicing Agreement and this Note Purchase Agreement, the terms of the Sale and
Servicing Agreement shall control.

          SECTION 11.13 Limitation on Liability. It is expressly understood
and agreed by the parties hereto that (a) this Note Purchase Agreement is
executed and delivered by Wilmington Trust Company, not individually or
personally, but solely as Owner Trustee of CapitalSource Funding II Trust, in
the exercise of the powers and authority conferred and vested in it, (b) each
of the representations, undertakings and agreements herein made on the part of
the Issuer is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the
purpose for binding only the Issuer, (c) nothing herein contained shall be
construed as creating any liability on Wilmington Trust Company, individually
or personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties
hereto and by any Person claiming by, through or under the parties hereto and
(d) under no circumstances shall Wilmington Trust Company be personally liable
for the payment of any indebtedness or expenses of the Issuer or be liable for
the breach or failure of any obligation, representation, warranty or covenant
made or undertaken by the Issuer under this Note Purchase Agreement or any
other related documents.

          SECTION 11.14 Amendment and Restatement.

          This Note Purchase Agreement is an amendment and restatement of the Note
Purchase Agreement dated as of September 17, 2003 (the “Old Note Purchase
Agreement”). On and after the effective date of this Note Purchase Agreement,
each reference herein and in the Sale and Servicing Agreement and each other
Basic Document to “the Note Purchase Agreement,” “thereunder,” “thereof,”
“therein” or any other expression of like import referring to the Old Note
Purchase Agreement shall mean and be a reference to this Note Purchase
Agreement. The execution, delivery and effectiveness of this Note Purchase
Agreement shall not operate as a waiver of any right, power or remedy hereunder
or constitute a waiver of any provision hereof. This amended and restated Note
Purchase Agreement does not constitute a novation or termination of the “Note
Purchase Agreement” or any other Basic Document and all obligations under the
“Note Purchase Agreement” are in all respects continuing as hereby amended.

[SIGNATURE PAGE FOLLOWS]

22

 

     IN WITNESS WHEREOF, the parties have caused this Note Purchase Agreement
to be executed by their respective officers hereunto duly authorized, as of the
date first above written.

	 	 	 	 	 
	 	 	CAPITALSOURCE FUNDING II TRUST,
	 
	 	 	 	 
	

	 	BY:
	 	Wilmington Trust Company, not in its

individual capacity but solely as

Owner Trustee
	 
	 	 	 	 
	

	 	By:
	 	          /s/ R. K. MANEY
	

	 	 	 	
 
	

	 	 	 	Name:  Roseline K. Maney
	

	 	 	 	Title:   Vice President
	 
	 	 	 	 
	 	 	CS FUNDING II DEPOSITOR LLC
	 
	 	 	 	 
	

	 	By:
	 	          /s/ STEVEN A. MUSELES
	

	 	 	 	
 
	

	 	 	 	Name:  Steven A. Museles
	

	 	 	 	Title:   Senior Vice President
	 
	 	 	 	 
	 	 	CAPITALSOURCE FINANCE LLC
	 
	 	 	 	 
	

	 	By:
	 	          /s/ STEVEN A. MUSELES
	

	 	 	 	
 
	

	 	 	 	Name:  Steven A. Museles
	

	 	 	 	Title:   Senior Vice President
	 
	 	 	 	 
	 	 	CITIGROUP GLOBAL MARKETS REALTY CORP.
	 
	 	 	 	 
	

	 	By:
	 	          /s/ JOHN ECK
	

	 	 	 	
 
	

	 	 	 	Name:  John Eck
	

	 	 	 	Title:   Vice President

Amended And Restated Note Purchase Agreement

 

 

Schedule I

Information for Notices

	1.	 	if to the Issuer:

CapitalSource Funding II Trust

c/o Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890

Attention: Corporate Trust Administration

	 	 	with a copy to the Administrator:

CapitalSource Finance LLC

4445 Willard Avenue - 12th Floor

Chevy Chase, Maryland 20815

Attention: Controller

	2.	 	if to the Depositor:

CS Funding
II Depositor LLC

4445 Willard Avenue - 12th Floor

Chevy Chase, Maryland 20815

Attention: Controller

	3.	 	if to CapitalSource:

CapitalSource Finance LLC

4445 Willard Avenue - 12th Floor

Chevy Chase, Maryland 20815

Attention: Controller

	4.	 	if to the Purchaser:

Citigroup Global Markets Realty Corp.

390 Greenwich Street, 6th Floor

New York, New York 10013

Attention: Asset-Backed Finance

 

 

EXHIBIT A

Form of Certificate from Closing Attorney

(see attached)

 

 

EXHIBIT B

Incremental Noteexv4w2

 

Exhibit 4.2

CHIPPAC, INC., as Company

ST ASSEMBLY TEST SERVICES LTD, as Parent

and

U.S. BANK NATIONAL ASSOCIATION, as Trustee

FIRST SUPPLEMENTAL INDENTURE

TO THE INDENTURE DATED AS OF MAY 28, 2003

Dated as of August 4, 2004

2.50% Convertible Subordinated Securities Due 2008

 

 

     FIRST SUPPLEMENTAL INDENTURE (this “First Supplemental Indenture”), dated
as of August 4, 2004, between ChipPAC, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (the “Company”), ST Assembly
Test Services Ltd, a Singapore public company limited by shares (the “Parent”)
and U.S. Bank National Association, a banking association duly organized and
existing under the laws of the United States of America, as trustee (the
“Trustee”).

RECITALS

     WHEREAS, the Company and the Trustee have heretofore executed an Indenture
(the “Base Indenture” and as amended hereby, the “Indenture”) dated as of May
28, 2003, pursuant to which the Company issued $150,000,000 aggregate principal
amount of 2.50% Convertible Subordinated Securities due 2008 (the
“Securities”);

     WHEREAS, the Company has entered into the Agreement and Plan of Merger and
Reorganization dated as of February 10, 2004 (the “Merger Agreement”) by and
among Parent, Camelot Merger, Inc., a Delaware corporation and a wholly owned
subsidiary of Parent (“Acquisition Corp”), and the Company, pursuant to which
Acquisition Corp will merge (the “Merger”) with and into the Company, with the
Company continuing as the surviving corporation of the Merger, and each share
of the Company’s Class A common stock, $0.01 par value per share immediately
prior to the effective time (“Effective Time”) of the Merger will be converted
into the right to receive 0.87 ADSs (as defined below);

     WHEREAS, Section 5.11 of the Base Indenture requires the Company to enter
into a supplemental indenture as a condition precedent to the Merger to provide
that the Securities be convertible into ADSs. Pursuant to Section 5.11 of the
Base Indenture, Parent is also required to execute this First Supplemental
Indenture to agree to be bound by the provisions relating to the conversion of
the Securities into ADSs;

     WHEREAS, the Company and Parent desire to amend the Base Indenture to
provide that the Securities are convertible into ADSs in accordance with
Section 5.11 of the Base Indenture;

     WHEREAS, all conditions and requirements necessary to make this First
Supplemental Indenture a valid, binding and legal instrument in accordance with
the terms of the Indenture have been performed and fulfilled and the execution
and delivery hereof by the Company and Parent have been in all respects duly
authorized;

     NOW, THEREFORE, for and in consideration of the above premises, it is
hereby covenanted and agreed, for the equal and proportionate benefit of the
Holders of the Securities, as follows:

 

 

ARTICLE 1

RELATION TO BASE INDENTURE, DEFINITIONS

     Section 1.01 Relation to Base Indenture. This First Supplemental
Indenture constitutes an integral part of the Indenture. In the event of
inconsistencies between the Base Indenture and this First Supplemental
Indenture, the terms of this First Supplemental Indenture shall govern.

     Section 1.02 Definitions. For all purposes of this First Supplemental
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:

     (a) capitalized terms used herein without definition have the meanings
specified in the Indenture;

     (b) all other terms used herein without definition which are defined in
the TIA, either directly or by reference therein, have the meanings assigned to
them therein; and

     (c) unless the context otherwise requires, any reference to an “Article”
or a “Section” refers to an Article or a Section, as the case may be, of this
First Supplemental Indenture.

     Section 1.03 Amendment to Definitions in Indenture. The following
definitions are hereby added to Section 1.01 of the Indenture in its
alphabetical location:

     “ADRs” means American depositary receipts which evidence ADSs.

     “ADSs” means the American depositary shares issued pursuant to the Deposit
Agreement, each of which represents the right to receive ten Ordinary Shares.

     “ADS Depositary” means Citibank, N.A., as depositary, appointed pursuant
to the Deposit Agreement or such other depositary appointed by Parent with
respect to the ADSs from time to time.

     “Deposit Agreement” means the Deposit Agreement, dated as of February 8,
2000, by and among Parent, the ADS Depositary, and all holders and beneficial
owners from time to time of the ADSs evidenced by ADRs issued thereunder, as
the same may be amended and/or supplemented from time to time in accordance
with its terms.

     “Ordinary Shares” includes any stock of any class of Parent which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of Parent and
which is not subject to redemption by Parent. However, subject to the
provisions of Section 5.11 of the Indenture,
ADSs issuable on conversion of the Securities shall represent only shares
of the class designated as Ordinary Shares of Parent at the date of this First
Supplemental Indenture or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or

2

 

involuntary liquidation, dissolution or winding-up of Parent (except for any
right the record date for which precedes the Conversion Date for such
Securities; with respect to preemptive rights in connection with rights issues
and rights to dividends, except in the case where the record date for closure
of Parent’s register of shareholders for a shareholders’ meeting precedes such
Conversion Date; and except for any other right excluded by mandatory
provisions of applicable law) and which are not subject to redemption by
Parent; provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares
of all such classes resulting from all such reclassifications.

     The definition of “Common Stock” is hereby deleted in its entirety. Other
than the provisions that have been specifically amended in this First
Supplemental Indenture, in each instance in the Indenture where there is a
reference to “Common Stock” or “the Company’s Common Stock”, such terms shall
be replaced by “ADSs” or “Parent’s ADSs”.

     The following definitions in Section 1.01 of the Indenture are hereby
replaced in their entirety as follows:

     “Board of Directors” means the Board of Directors of the Company except
where the context specifies “Board of Directors of Parent”, in which case, it
means the Board of Directors of Parent, and in both cases, include any
committee thereof duly authorized to act on behalf of such Board.

     “Officer” means, with respect to Parent or the Company, as the case may
be, the Chief Executive Officer, the Chief Financial Officer, the President,
any Vice President, the Treasurer, the Corporate Controller or the Secretary of
Parent or the Company.

     “Officer’s Certificate” means a certificate signed by an Officer of the
Company, except where the context specifies “Officer’s Certificate of Parent”,
in which case, it means an Officer’s Certificate signed by an Officer of
Parent.

     “Opinion of Counsel” means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to
Parent, the Company or the Trustee.

     The following definition in Section 4.07 of the Indenture is hereby
replaced in its entirety as follows:

     A “Change of Control” shall be deemed to have occurred if any of the
following occurs after the date hereof:

     (1) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than Parent, is or becomes the “beneficial owner” (as
defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of
a majority in the aggregate of the total voting power of the Voting Stock of
the Company or has the power, directly or indirectly, to elect a majority of
the members of the Board of Directors of the Company (for the purposes of this
clause (1), such person shall be deemed to (A) beneficially

3

 

own any Voting
Stock of a person (the “specified person”) held by any other person (the
“parent entity”) so long as such person beneficially owns (as so defined),
directly or indirectly, in the aggregate a majority of the voting power of the
Voting Stock of the parent entity and (B) have “beneficial ownership” of all
shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time);

     (2) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), is or becomes the “beneficial owner” (as defined in Rules 13d-3
and 13d-5 under the Exchange Act), directly or indirectly, of a majority in the
aggregate of the total voting power of the Voting Stock of Parent or has the
power, directly or indirectly, to elect a majority of the members of the Board
of Directors of Parent (for the purposes of this clause (2), such person shall
be deemed to (A) beneficially own any Voting Stock of a person (the “specified
person”) held by any other person (the “parent entity”) so long as such person
beneficially owns (as so defined), directly or indirectly, in the aggregate a
majority of the voting power of the Voting Stock of the parent entity and (B)
have “beneficial ownership” of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time);

     (3) the merger or consolidation of the Company with or into another Person
or the merger of another Person with or into the Company, or the sale of all or
substantially all the assets of the Company and its Subsidiaries (determined on
a consolidated basis) to another Person other than a transaction following
which Holders of securities that represented 100% of the Voting Stock of the
Company or Parent, as the case may be, immediately prior to such transaction
(or other securities into which such securities are converted as part of such
merger or consolidation transaction) own, directly or indirectly, at least a
majority of the voting power of the Voting Stock of the surviving Person;

     (4) the merger or consolidation of Parent with or into another Person or
the merger of another Person with or into Parent, or the sale of all or
substantially all the assets of Parent (determined on a consolidated basis) to
another Person other than a transaction following which Holders of securities
that represented 100% of the Voting Stock of Parent, as the case may be,
immediately prior to such transaction (or other securities into which such
securities are converted as part of such merger or consolidation transaction)
own, directly or indirectly, at least a majority of the voting power of the
Voting Stock of the surviving Person; or

     (5) the adoption of a plan relating to the liquidation or dissolution of
the Company or Parent.

     Notwithstanding anything to the contrary set forth in this Section 4.07, a
Change of Control will not be deemed to have occurred if either:

     (a) the ADS Closing Price (as defined in Section 5.06(f)) for any five
Trading Days during the ten Trading Days immediately preceding the Change of
Control is at least equal to 105% of the Conversion Price in effect immediately
preceding the Change of Control; or

     (b) 100% of the consideration (excluding cash payments for fractional
shares) received or to be received by the holders of shares of the Company’s
common stock or Parent’s

4

 

Ordinary Shares in the transaction or transactions
constituting a Change of Control consists of shares of common stock, or
American depositary shares representing shares of common stock, that are, or
upon issuance will be, traded on a national securities exchange in the United
States or though the Nasdaq National Market and as a result of such transaction
or transactions the Securities become convertible solely into such common stock
or American depositary shares.

ARTICLE 2

AMENDMENT TO FORM OF SECURITY

     Section 2.01 Form of Security. Exhibit A of the Indenture is replaced in
its entirety in the form attached to this First Supplemental Indenture. Upon
the execution of this First Supplemental Indenture, the Company shall execute
and the Trustee shall authenticate and deliver, Securities in the form set
forth in Exhibit A, in substitution for Securities then outstanding and all
Securities presented or delivered to the Trustee on and after the Effective
Time shall be in the form of Exhibit A attached hereto to give effect to the
First Supplemental Indenture.

     Nothing contained in this First Supplemental Indenture shall require the
Holder of any Security to submit or exchange such Security prior to the
Effective Time. The Trustee shall not at any time be under any responsibility
to acquire or cause any Security now or hereafter outstanding to be presented
or delivered to it for any purposes provided for in this Section 2.01.

ARTICLE 3

AMENDMENT TO CONVERSION PROVISIONS

     Article 5 of the Indenture is hereby replaced in its entirety as follows:

     Section 5.01 “Conversion Privilege. Subject to the further provisions of
this Article 5, a Holder of a Security may, at the Holder’s option, 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 ADSs at any time prior
to the close of business on the Business Day immediately preceding June 1,
2008, at the Conversion Price then in effect; provided, however, that if such
Security is submitted or presented for purchase pursuant to Article 4 of this
Indenture, such conversion right shall terminate at the close of business on
the Business Day immediately preceding the Change of Control Purchase Date for
such Security or such earlier date as the Holder presents such Security for
purchase (unless the Company shall default in making the Change of Control
Purchase Price payment 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 purchased). The number
of ADSs issuable upon conversion of a Security shall be determined by dividing
the principal amount of the Security or portion thereof surrendered for
conversion by the Conversion Price in effect on the Conversion Date. The
Conversion Price as of the date hereof is $9.267 and is subject to adjustment
as provided in this Article 5.

5

 

     Provisions of this Indenture that apply to conversion of all of a Security
also apply to conversion of a portion of a Security.

     A Security in respect of which a Holder has delivered a Change of Control
Purchase Notice pursuant to Section 4.07(c) of the Indenture exercising the
option of such Holder to require the Company to purchase such Security may be
converted only if such Change of Control Purchase Notice is withdrawn by a
written notice of withdrawal delivered to a Paying Agent prior to the close of
business on the Business Day immediately preceding the Change of Control
Purchase Date in accordance with Section 4.08 of this Indenture.

     A Holder of Securities is not entitled to any rights of a holder of ADSs
until such Holder has converted its Securities into ADSs, and only to the
extent such Securities are deemed to have been converted into ADSs pursuant to
this Article.

     The ADSs, when issued, shall be subject to the terms of the Deposit
Agreement.

     Section 5.02 Conversion Procedure. To convert a Security, a Holder must
(a) complete Part I of and manually sign the conversion notice on the back of
the Security (the “Conversion Notice”) 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. The
date on which the Holder satisfies all of those requirements is the “Conversion
Date”. As soon as practicable after the Conversion Date, Parent shall deliver
to the Holder through a Conversion Agent the number of ADSs issuable upon the
conversion and cash in lieu of any fractional ADSs pursuant to Section 5.03.
Anything herein to the contrary notwithstanding, in the case of Global
Securities, conversion notices may be delivered and such Securities may be
surrendered for conversion in accordance with Applicable Procedures as in
effect from time to time.

     The Conversion Agent shall use commercially reasonable efforts to procure
the completion of Part II of the Conversion Notice by the Holder who converts a
Security. The Conversion Agent shall promptly, but in no event later than two
Business Days following the Conversion Date, deliver a copy of such duly
completed Conversion Notice to the ADS Depositary, the Custodian (as defined in
the Deposit Agreement), the Company and counsel to the Company.

     As soon as practicable after the Conversion Date, Parent shall, on behalf
of such Holder, deliver to and deposit with the ADS Depositary or its
custodian, in accordance with the applicable terms and conditions of the
Deposit Agreement, such number of Ordinary Shares represented by the number of
ADSs such Holder will receive upon conversion, based on the
applicable Ordinary Share-to-ADS ratio then in effect. Such Ordinary
Shares will be registered in the name of the ADS Depositary or its nominee.
Subject to compliance with the terms of the Deposit Agreement, the ADS
Depositary will issue such number of ADSs representing the deposited Ordinary
Shares to such Holder.

     The ADS Depositary or its nominee shall be deemed to be the registered
holder of the Ordinary Shares represented by the ADSs issued upon conversion on
the date it is registered as such in Parent’s share register. Upon conversion
of a Security, a Holder shall no longer be

6

 

considered a Holder of such
Security. No payment or adjustment will be made for dividends or distributions
on Ordinary Shares issued upon conversion of a Security.

     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 subject to purchase following a Change of Control 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 in 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 Section 5.02, 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.

     Nothing in this Section shall affect the right of a Holder in whose name
any Security is registered at the close of business on a record date to receive
the interest payable on such Security on the related interest payment date in
accordance with the terms of this Indenture and the Securities. If a Holder
converts more than one Security at the same time, the number of ADSs issuable
upon the conversion shall be based on the aggregate principal amount of
Securities converted.

     Upon surrender of a Security that is converted in part, the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder, a new
Security equal in principal amount to the unconverted portion of the Security
surrendered.

     Section 5.03 Fractional Shares. The ADS Depositary will not issue
fractional ADSs upon conversion of Securities. In lieu thereof, Parent will
pay an amount in cash based upon the ADS Closing Price on the Trading Day
immediately prior to the Conversion Date.

     Section 5.04 Taxes on Conversion. If a Holder converts a Security, the
Company shall pay any documentary, stamp or similar issue or transfer tax due
on the issue of ADSs upon such conversion. However, the Holder shall pay any
such tax which is due because the Holder requests the ADSs to be issued in
a name other than the Holder’s name. The Conversion Agent may refuse to
deliver the ADSs being issued in a name other than the Holder’s name until the
Conversion Agent receives a sum sufficient to pay any tax which will be due
because the ADSs are to be issued in a name other than the Holder’s name.
Nothing herein shall preclude any tax withholding required by law or
regulation.

     Section 5.05 Parent To Provide Ordinary Shares. Parent shall from time
to time as may be necessary, reserve, out of its authorized but unissued
Ordinary Shares, a sufficient number of Ordinary Shares to permit the
conversion of all outstanding Securities into ADSs.

7

 

     All ADSs delivered upon conversion of the Securities and all of the
Ordinary Shares represented by such ADSs shall be newly issued securities, and
such Ordinary Shares shall be duly authorized, validly issued, fully paid and
nonassessable and shall be free from preemptive (and similar) rights, free of
any lien, encumbrance, security interest, charge, mortgage or adverse claim and
shall rank fully pari passu, including with regards to trading and settlement,
with all other Ordinary Shares outstanding at the time of deposit with the ADS
Depositary.

     Parent will endeavor promptly to comply with all federal and state
securities laws regulating the offer and delivery of ADSs upon conversion of
Securities, if any, and will list or cause to have quoted such ADSs on a
national securities exchange or on the Nasdaq National Market or other
over-the-counter market or such other market on which the ADSs are then listed
or quoted; provided, however, that if rules of such automated quotation system
or exchange permit Parent to defer the listing of such ADSs until the first
conversion of the Securities into ADSs in accordance with the provisions of
this Indenture, Parent covenants to list such ADSs issuable upon conversion of
the Securities in accordance with the requirements of such automated quotation
system or exchange at such time.

     Section 5.06 Adjustment of Conversion Price. The conversion price as
stated in Section 5.01 (the “Conversion Price”) shall be adjusted from time to
time by Parent as follows:

     (a) In case Parent shall (i) pay a dividend on its Ordinary Shares in the
form of Ordinary Shares, (ii) make a distribution on its Ordinary Shares in the
form of Ordinary Shares, (iii) subdivide its outstanding Ordinary Shares into a
greater number of Ordinary Shares, or (iv) combine its outstanding Ordinary
Shares into a smaller number of Ordinary Shares, the Conversion Price in effect
immediately prior thereto shall be adjusted so that, assuming the same Ordinary
Share-to-ADS ratio applies prior to and after such event, the Holder of any
Security thereafter surrendered for conversion shall be entitled to receive the
number of ADSs which it would have owned had such Security been converted
immediately prior to the happening of such event. An adjustment made pursuant
to this subsection (a) shall become effective immediately after the record date
in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of subdivision or combination.

     (b) In case Parent shall issue rights or warrants to all or substantially
all holders of its Ordinary Shares entitling them (for a period commencing no
earlier than the record date described below and expiring not more than 60 days
after such record date) to subscribe for or purchase Ordinary Shares (or
securities convertible into Ordinary Shares) at a price per share (or having a
conversion price per share) less than the Current Market Price Per Ordinary
Share (as defined in Section 5.06(g)) on the record date for the determination
of shareholders entitled to receive such rights or warrants, the Conversion
Price in effect immediately prior thereto shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to such record date by a fraction of which (x) the numerator
shall be the number of Ordinary Shares outstanding on such record date plus the
number of Ordinary Shares which the aggregate offering price of the total
number of Ordinary Shares so offered (or the aggregate conversion price of the
convertible securities so offered, which shall be determined by multiplying the
number of Ordinary Shares issuable upon conversion of such convertible
securities by the conversion price per Ordinary Share pursuant to the terms of
such convertible

8

 

securities) would purchase at the Current Market Price Per
Ordinary Share on such record date, and (y) the denominator shall be the number
of Ordinary Shares outstanding on such record date plus the number of
additional Ordinary Shares offered (or into which the convertible securities so
offered are convertible). Such adjustment shall be made successively whenever
any such rights or warrants are issued, and shall become effective immediately
after such record date. If at the end of the period during which such rights
or warrants are exercisable not all rights or warrants shall have been
exercised, the adjusted Conversion Price shall be immediately readjusted to
what it would have been based upon the number of additional Ordinary Shares
actually issued (or the number of Ordinary Shares issuable upon conversion of
convertible securities actually issued).

     (c) In case Parent shall distribute to all or substantially all holders of
its Ordinary Shares any shares of capital stock of Parent (other than in the
form of Ordinary Shares), evidences of indebtedness or other non-cash assets
(including securities of any person other than Parent but excluding (1)
dividends or distributions paid in cash or (2) dividends or distributions
referred to in subsection (a) of this Section 5.06), or shall distribute to all
or substantially all holders of its Ordinary Shares rights or warrants to
subscribe for or purchase any of its securities (excluding those rights and
warrants referred to in subsection (b) of this Section 5.06 and also excluding
the distribution of rights to all holders of Ordinary Shares pursuant to the
adoption of a stockholders’ rights plan, if any), then in each such case the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the current Conversion Price by a fraction of which
(x) the numerator shall be the Current Market Price Per Ordinary Share on the
record date mentioned below less the fair market value on such record date (as
reasonably determined in good faith by the Board of Directors of Parent, whose
determination shall be conclusive evidence of such fair market value and which
shall be evidenced by an Officers’ Certificate of Parent delivered to the
Trustee) of the portion of the capital stock, evidences of indebtedness or
other non-cash assets so distributed or of such rights or warrants applicable
to one Ordinary Share (determined on the basis of the number of Ordinary Shares
outstanding on the record date), and (y) the denominator shall be the Current
Market Price Per Ordinary Share on such record date. Such adjustment shall be
made successively whenever any such distribution is made and shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such distribution.

     (d) In case Parent shall, by dividend or otherwise, at any time distribute
(a “Triggering Distribution”) to all or substantially all holders of its
Ordinary Shares cash in an aggregate amount that, together with the aggregate
amount of (i) any cash and the fair market value (as reasonably determined in
good faith by the Board of Directors of Parent, whose determination shall be
conclusive evidence of such fair market value and which shall be evidenced by
an Officers’ Certificate of Parent delivered to the Trustee) of any other
consideration payable in respect of any purchase by Parent for Ordinary Shares
consummated within the 12 months preceding the date of payment of the
Triggering Distribution and in respect of which no Conversion Price adjustment
pursuant to this Section 5.06 has been made and (ii) all other cash
distributions to all or substantially all holders of its Ordinary Shares made
within the 12 months preceding the date of payment of the Triggering
Distribution and in respect of which no Conversion Price adjustment pursuant to
this Section 5.06 has been made, exceeds an amount equal to 10.0% of the
product of the Current Market Price Per Ordinary Share on the Business Day
immediately preceding the day on which such Triggering Distribution is declared
by Parent (the “Determination Date”) multiplied by the number of Ordinary
Shares outstanding on the

9

 

Determination Date, the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying such
Conversion Price in effect immediately prior to the Determination Date by a
fraction, of which the numerator shall be the Current Market Price Per Ordinary
Share on the Determination Date less the sum of the aggregate amount of cash
and the aggregate fair market value (as reasonably determined in good faith by
the Board of Directors of Parent, whose determination shall be conclusive
evidence of such fair market value and which shall be evidenced by an Officers’
Certificate of Parent delivered to the Trustee) of any such other consideration
so distributed, paid or payable within such 12 months (including, without
limitation, the Triggering Distribution) applicable to one Ordinary Share
(determined on the basis of the number of Ordinary Shares outstanding on the
Determination Date) and the denominator shall be such Current Market Price Per
Ordinary Share on the Determination Date, such reduction to become effective
immediately prior to the opening of business on the day following the date on
which the Triggering Distribution is paid.

     (e) In case any purchase made by Parent of Ordinary Shares and such
purchase shall involve the payment of aggregate consideration in an amount
(determined as the sum of the aggregate amount of cash consideration and the
aggregate fair market value (as reasonably determined in good faith by the
Board of Directors of Parent, whose determination shall be conclusive evidence
of such fair market value and which shall be evidenced by an Officers’
Certificate of Parent delivered to the Trustee) of any other consideration)
that, together with the aggregate amount of (i) any cash and the fair market
value (as reasonably determined in good faith by the Board of Directors of
Parent, whose determination shall be conclusive evidence of such fair market
value and which shall be evidenced by an Officers’ Certificate of Parent
delivered to the Trustee) of any other consideration payable in respect of any
other purchase by Parent for Ordinary Shares consummated within the 12 months
preceding the Expiration Date (as defined below) and in respect of which no
Conversion Price adjustment pursuant to this Section 5.06 has been made and
(ii) all cash distributions to all or substantially all holders of its Ordinary
Shares made within the 12 months preceding the Expiration Date and in respect
of which no Conversion Price adjustment pursuant to this Section 5.06 has been
made, exceeds an amount equal to 10.0% of the product of the Current Market
Price Per Ordinary Share as of the most recent date (the “Expiration Date”)
where a purchase was made (the last time at which a purchase was made on the
Expiration Date is hereinafter sometimes called the “Expiration
Time”) multiplied by the number of Ordinary Shares outstanding (including
shares purchased within the last 12 months preceding the Expiration Date, the
“Purchased Shares”) at the Expiration Time, then, immediately prior to the
opening of business on the day after the Expiration Date, the Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on the Expiration Date by a fraction of which the numerator shall be
the product of the number of Ordinary Shares outstanding (including Purchased
Shares) at the Expiration Time multiplied by the Current Market Price Per
Ordinary Share on the Trading Day next succeeding the Expiration Date and the
denominator shall be the sum of (x) the aggregate consideration (determined as
aforesaid) payable to shareholders of all Purchased Shares and (y) the product
of the number of Ordinary Shares outstanding (less any Purchased Shares) at the
Expiration Time and the Current Market Price Per Ordinary Share on the Trading
Day next succeeding the Expiration Date, such reduction to become effective
immediately prior to the opening of business on the day following the
Expiration Date. In the event that Parent is obligated to purchase Ordinary
Shares, but Parent is permanently prevented by applicable law from effecting
any or all

10

 

such purchases or any or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which would
have been in effect based upon the number of Ordinary Shares actually
purchased. If the application of this Section 5.06(e) to any purchase would
result in an increase in the Conversion Price, no adjustment shall be made for
such purchase under this Section 5.06(e).

     (f) For the purpose of any computation under subsections (b), (c), (d) and
(e) of this Section 5.06, the current market price per Ordinary Share (the
“Current Market Price Per Ordinary Share”) on any date shall be deemed to be
the average of the daily Closing Prices for the 30 consecutive Trading Days
commencing 45 Trading Days before (i) the Determination Date or the Expiration
Date, as the case may be, with respect to distributions or purchases under
subsection (e) of this Section 5.06 or (ii) the record date with respect to
distributions, issuances or other events requiring such computation under
subsection (b), (c) or (d) of this Section 5.06. The Closing Price for each day
(the “Closing Price”) shall be the ADS Closing Price for such day as adjusted
by the then effective Ordinary Shares-to-ADS ratio. The ADS Closing Price of
each day (the “ADS Closing Price”) shall be the last reported sales price or,
in case no such reported sale takes place on such date, the average of the
reported closing bid and asked prices in either case on the New York Stock
Exchange (the “NYSE”) or the Nasdaq National Market (the “NNM”), or, if
Parent’s ADS is not listed or admitted to trading on the NYSE or the NNM, the
principal national securities exchange or quotation system on which Parent’s
ADS is quoted or listed or admitted to trading or, if not quoted or listed or
admitted to trading on any national securities exchange or quotation system,
the closing sales price or, in case no reported sale takes place, the average
of the closing bid and asked prices, as furnished by any two members of the
National Association of Securities Dealers, Inc. selected from time to time by
Parent for that purpose. If no such ADS Closing Prices are available, the
Current Market Price Per Ordinary Share shall be the fair value of an Ordinary
Share (as reasonably determined in good faith by the Board of Directors of
Parent whose determination shall be conclusive evidence of such fair market
value and which shall be evidenced by an Officers’ Certificate of Parent
delivered to the Trustee).

     (g) In case the Ordinary Shares-to-ADS ratio is adjusted, then the
Conversion Price shall be adjusted proportionately so that the Holder of any
Security thereafter surrendered
for conversion shall be entitled to receive ADSs representing the number
Ordinary Shares as if the Security had been converted immediately prior to the
Ordinary Shares-to-ADS ratio adjustment, provided, that if the adjustment to
the Ordinary Shares-to-ADS ratio is adjusted pursuant to, or in connection
with, or as a result of, an event described in subsections (a) to (e) of this
Section 5.06, and an adjustment to the Conversion Price has been made pursuant
to the applicable subsection, no adjustment to the Conversion Price shall be
made pursuant to this subsection (g). An adjustment made pursuant to this
subsection (g) shall become effective immediately after the effectiveness of
the Ordinary Shares-to-ADS adjustment.

     (h) In any case in which this Section 5.06 shall require that an
adjustment be made following a record date or a Determination Date or
Expiration Date, as the case may be, established for purposes of this Section
5.06, Parent may elect to defer (but only until five Business Days following
the filing by Parent with the Trustee of the certificate described in Section
5.09) issuing to the Holder of any Security converted after such record date or
Determination Date or Expiration Date the Ordinary Shares and other capital
stock of Parent

11

 

issuable upon such conversion over and above the Ordinary
Shares and other capital stock of Parent
 issuable upon such conversion only on
the basis of the Conversion Price prior to adjustment; and, in lieu of the
Ordinary Shares the issuance of which is so deferred, Parent shall issue or
cause its transfer agent to issue due bills or other appropriate evidence
prepared by Parent of the right to receive the Ordinary Shares. If any
distribution in respect of which an adjustment to the Conversion Price is
required to be made as of the record date or Determination Date or Expiration
Date therefor is not thereafter made or paid by Parent for any reason, the
Conversion Price shall be readjusted to the Conversion Price which would then
be in effect if such record date had not been fixed or such effective date or
Determination Date or Expiration Date had not occurred.

     Section 5.07 No Adjustment. No adjustment in the Conversion Price shall
be required unless the adjustment would require an increase or decrease of at
least 1 % in the Conversion Price as last adjusted; provided, however, that any
adjustments which by reason of this Section 5.07 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Article 5 shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be.

     No adjustment need be made for issuances of Ordinary Shares pursuant to a
plan for reinvestment of dividends or interest or for a change in the par value
or a change to no par value of the Ordinary Shares.

     To the extent that the Securities become convertible into the right to
receive cash, no adjustment need be made thereafter as to the cash. Interest
will not accrue on the cash.

     Section 5.08 Adjustment for Tax Purposes. Parent shall be entitled to
make such reductions in the Conversion Price, in addition to those required by
Section 5.06, as it in its discretion shall determine to be advisable in order
that any stock dividends, subdivisions of shares, distributions of rights to
purchase stock or
securities or distributions of securities convertible into or exchangeable
for stock hereafter made by Parent to its shareholders shall not be taxable.

     Section 5.09 Notice of Adjustment. Whenever the Conversion Price or
conversion privilege is adjusted, Parent shall promptly mail to Securityholders
a notice of the adjustment and file with the Trustee an Officer’s Certificate
of Parent briefly stating the facts requiring the adjustment and the manner of
computing it. Unless and until the Trustee shall receive an Officer’s
Certificate of Parent setting forth an adjustment of the Conversion Price, the
Trustee may assume without inquiry that the Conversion Price has not been
adjusted and that the last Conversion Price of which it has knowledge remains
in effect.

     Section 5.10 Notice of Certain Transactions. In the event that:

     (i) Parent takes any action which would require an adjustment in the
Conversion Price;

     (j) Parent consolidates or merges with or into, or transfers all or
substantially all of its property and assets to, another corporation or another
corporation merges into Parent and, in each such case, shareholders of Parent
must approve the transaction; or

12

 

     (k) there is a dissolution or liquidation of Parent,

     Parent shall mail to Holders and file with the Trustee a notice stating
the proposed record or effective date, as the case may be. Parent shall mail
the notice at least ten days before such date. Failure to mail such notice or
any defect therein shall not affect the validity of any transaction referred to
in clause (1), (2) or (3) of this Section 5.10.

     Section 5.11 Effect of Reclassification, Consolidation, Merger or Sale on
Conversion Privilege. If any of the following shall occur, namely: (a) any
reclassification or change of Ordinary Shares represented by ADSs issuable upon
conversion of the Securities (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination, or any other change for which an adjustment is
provided in Section 5.06); (b) any consolidation or merger or combination to
which Parent is a party other than a merger in which Parent is the continuing
corporation and which does not result in any reclassification of, or change
(other than in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination) in,
outstanding Ordinary Shares; or (c) any sale, conveyance, transfer or lease of
the property and assets of Parent as an entirety or substantially as an
entirety, directly or indirectly, to any Person, then Parent, or such
successor, purchasing, transferee or leasing Person, as the case may be, shall,
as a condition precedent to such reclassification, change, combination,
consolidation, merger, sale, conveyance, transfer or lease, execute and deliver
to the Trustee a supplemental indenture providing that the Holder of each
Security then outstanding shall have the right to convert such Security into
the
kind and amount of shares of stock and other securities and property
(including cash) receivable upon such reclassification, change, combination,
consolidation, merger, sale, conveyance, transfer or lease by a holder of the
number of ADSs deliverable upon conversion of such Security immediately prior
to such reclassification, change, combination, consolidation, merger, sale,
conveyance, transfer or lease. Such supplemental indenture shall provide for
adjustments of the Conversion Price that shall be as nearly equivalent as may
be practicable to the adjustments of the Conversion Price provided for in
Article 5. If, in the case of any such consolidation, merger, combination,
sale, conveyance, transfer or lease the stock or other securities and property
(including cash) receivable thereupon by a holder of Ordinary Shares, include
shares of stock or other securities and property of a Person other than the
successor, purchasing, transferee or leasing Person, as the case may be, in
such consolidation, merger, combination, sale, conveyance, transfer or lease,
then such supplemental indenture shall also be executed by such other Person
and shall contain such additional provisions to protect the interests of the
Holders of the Securities as the Board of Directors of the Company or Parent
shall reasonably consider necessary by reason of the foregoing. The provisions
of this Section 5.11 shall similarly apply to successive reclassifications,
changes, combinations, consolidations, mergers, sales, conveyances, transfers
or leases.

     In the event the Company or Parent shall execute a supplemental indenture
pursuant to this Section 5.11, Parent shall promptly file with the Trustee (x)
an Officer’s Certificate of Parent briefly stating the reasons therefor, the
kind or amount of shares of stock or other securities or property (including
cash) receivable by Holders of the Securities upon the conversion of their
Securities after any such reclassification, change, combination, consolidation,
merger, sale, conveyance, transfer or lease, any adjustment to be made with
respect thereto and that all conditions precedent have been complied with and
(y) an Opinion of Counsel that all

13

 

conditions precedent have been complied
with, and shall promptly mail notice thereof to all Holders.

     Section 5.12 Trustee’s Disclaimer. The Trustee shall have no duty to
determine when an adjustment under this Article 5 should be made, how it should
be made or what such adjustment should be, but may accept as conclusive
evidence of that fact or the correctness of any such adjustment, and shall be
protected in relying upon, an Officer’s Certificate of the Company or Parent,
including the Officer’s Certificate of Parent with respect thereto which Parent
is obligated to file with the Trustee pursuant to Section 5.09. The Trustee
makes no representation as to the validity or value of any securities or assets
issued upon conversion of Securities, and the Trustee shall not be responsible
for the Company’s or Parent’s failure to comply with any provisions of this
Article 5.

     The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 5.11, but may accept as conclusive evidence of the
correctness thereof, and shall be fully protected in relying upon, the
Officer’s Certificate with respect thereto which Parent is obligated to file
with the Trustee pursuant to Section 5.11.

     Section 5.13 Voluntary Reduction. Parent from time to time may voluntarily reduce the Conversion Price by
any amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period if the Board of Directors of Parent
determines that such reduction would be in the best interests of Parent, and
Parent provides 15 days’ prior notice of any voluntary reduction in the
Conversion Price; provided, however, that in no event may Parent reduce the
Conversion Price to be less than the par value of an Ordinary Share, and
provided, further, that no such decrease shall be taken into account for
purposes of the determination of whether the ADS Closing Price exceeds 105% of
the Conversion Price pursuant to Section 4.07.”

ARTICLE 4

AMENDMENT TO EVENTS OF DEFAULT

     Section 4.01 Amendment to Definition of “Events of Default”. The
definition of “Events of Default” in Section 7.01 of the Indenture is amended
as follows:

     (a) by adding “or Parent” after each instance the word “Company” is used
in clause (6) or (7), deleting the word “or” at the end of clause (7), deleting
the period at the end of clause (8) and adding the word “or”;

     (b) by adding the following clauses after clause (8):

	 	(9)	 	Parent fails to comply with any of
its agreements contained in the Securities or this
Indenture and such failure continues for 60 days after
the notice specified below:

14

 

     (c) by replacing in each instance the words “clauses (3) or (5)” with
“clauses (3), (5) or (9)” in the third to the last and the penultimate
paragraphs of Section 7.01.

ARTICLE 5

MISCELLANEOUS

     Section 5.01 Notices. Any notice or communication shall be in writing and
delivered or mailed to the address set forth below:

     if to the Company:

ChipPAC, Inc.

47400 Kato Road

Fremont, CA 94538

Facsimile No.: (510) 979-8000

Attention: Chief Financial Officer

     if to Parent:

ST Assembly Test Services Ltd

10 Ang Mo Kio Street 65

#05-17/20 Techpoint

Singapore 569059

Facsimile No.: (65) 6824-7629

Attention: General Counsel

     if to the Trustee:

U.S. Bank National Association

60 Livingston Avenue

St. Paul, MN 55107-2292

Telephone No. (651) 495-3913

Facsimile: (651) 495-8097

Attention: Corporate Trust Department

     The Company, Parent or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.

     Any notice or communication mailed to a Securityholder shall be mailed to
the Securityholder at the Securityholder’s address as it appears on the
registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.

     Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to any other
Securityholder. If a notice or

15

 

communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.

     Section 5.02 Communication by Holders with Other Holders. Securityholders
may communicate pursuant to TIA § 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities. The Company,
Parent, the Trustee, the Registrar and anyone else shall have the protection of
TIA § 312(c).

     Section 5.03 Separability Clause. In case any provision in this First
Supplemental Indenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

     Section 5.04 Confirmation; Effectiveness. As amended by this First
Supplemental Indenture, the Indenture and the Securities are ratified and
confirmed in all respects and the Indenture as so amended shall be read, taken
and construed as one and the same instrument. The provisions of this First
Supplemental Indenture shall become operative as of the date of this First
Supplemental Indenture.

     Section 5.05 GOVERNING LAW. THIS FIRST SUPPLEMENTAL INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.

     Section 5.06 No Recourse Against Others. A director, officer, employee or
stockholder, or shareholder, as such, of the Company or Parent shall not have
any liability for any obligations of the Company under the Securities, the
Indenture or this First Supplemental Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder shall waive and release all such liability. This
waiver and release shall be part of the consideration for the execution of this
First Supplemental Indenture.

     Section 5.07 Successors. All agreements of the Company and Parent in this
First Supplemental Indenture, the Indenture and the Securities shall bind their
successors. All agreements of the Trustee in this First Supplemental
Indenture, the Indenture and the Securities shall bind its successors.

     Section 5.08 Multiple Originals. The parties may sign any number of
copies of this First Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement. One signed
copy is enough to prove this First Supplemental Indenture.

     Section 5.09 Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this First
Supplemental Indenture and the Indenture have been inserted for convenience of
reference only, are not intended to be considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.

16

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be executed by their duly authorized officers as of the date first
above written.

	 	 	 	 	 
	 	 	CHIPPAC, INC.
	 	 	
By:
	 	/s/ Dennis McKenna

Name:  Dennis McKenna

Title:    President and Chief Executive Officer

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be executed by their duly authorized officers as of the date first
above written.

	 	 	 	 	 
	 	 	ST ASSEMBLY TEST SERVICES LTD
	 	 	
By:
	 	/s/  Tan Lay Koon

Name:  Tan Lay Koon

Title:    President and Chief Executive Officer

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be executed by their duly authorized officers as of the date first
above written.

	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION
	 	 	
By:
	 	/s/  Frank P. Leslie III

Name:  Frank P. Leslie III

Title:    Vice President

 

 

EXHIBIT A

[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, 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 ST ASSEMBLY TEST
SERVICES LTD ORDINARY SHARES REPRESENTED BY AMERICAN DEPOSITARY SHARES (“ADSs”)
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

	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.

A-1

 

     [THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF CHIPPAC, INC. THAT
(a) THIS SECURITY AND THE ADSs 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 WILL NOT, DIRECTLY OR
INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION 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.]

     [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 EMPLOYEE BENEFIT PLAN (A “PLAN”) AS DEFINED
IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED (“ERISA”), EXCEPT THAT SUCH PURCHASE FOR OR ON BEHALF OF A PLAN SHALL
BE PERMITTED:

     1. 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;

     2. TO THE EXTENT SUCH PURCHASE IS MADE BY OR ON BEHALF OF AN INSURANCE
COMPANY POOLED SEPARATE ACCOUNT MAINTAINED BY

A-2

 

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;

     3. TO THE EXTENT SUCH PURCHASE IS MADE BY AN INVESTMENT FUND 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;

     4. TO THE EXTENT SUCH PLAN IS A GOVERNMENTAL PLAN, AS DEFINED IN SECTION
3(32) OF ERISA WHICH IS NOT SUBJECT TO THE PROVISIONS OF TITLE 1 OF ERISA, AND
AS DEFINED IN SECTION 414(d) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”);

     5. 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

A-3

 

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;

     6. 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

     7. 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.]

A-4

 

CHIPPAC, INC.

CUSIP No. [*]

             No. 1

ISIN No. [*]

2.50% CONVERTIBLE SUBORDINATED NOTE DUE 2008

     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 Cede & Co., or registered assigns, the
principal sum of 150,000,000 US Dollars on June 1, 2008 [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 1 and December 1, beginning December 1, 2003

     Record Dates: May 15 and November 15

     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.

[Signatures on Following Pages]

	3	 	This phrase should be included only if the Security is a Global Security

A-5

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

	 	 	 	 	 
	 	 	CHIPPAC, INC.
	 	 	
By:
	 	 

Name:
Title:

Trustee’s Certificate of Authentication: This is one

of the Securities referred to in the within-mentioned

Indenture.

U.S. BANK NATIONAL ASSOCIATION,

as Trustee,

Authorized Signatory

By: Frank P. Leslie III

A-6

 

[FORM OF REVERSE SIDE OF SECURITY]

CHIPPAC, INC.

2.50% CONVERTIBLE SUBORDINATED NOTE DUE JUNE 1, 2008

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 2.50% per annum. The Company shall pay interest semiannually on June 1 and
December 1 of each year, commencing December 1, 2003; provided, however, that
such interest may be increased by any Additional Interest accruing from time to
time on the principal amount of this Security as provided in the Registration
Rights Agreement. 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. 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 May 28, 2003; 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.

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 May 15 or November 15, 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, U.S. Bank National Association (the “Trustee”, which term shall
include any successor trustee under the Indenture hereinafter referred to) will
act as Paying Agent, 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.

A-7

 

4. Indenture, Limitations

     This Security is one of a duly authorized issue of Securities of the
Company designated as its 2.50% Convertible Subordinated Notes Due 2008 (the
“Securities”) issued under an Indenture dated as of May 28, 2003 (together with
any supplemental indentures thereto, the “Indenture”), among the Company, STATS
ChipPAC, Ltd 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 limited to $150,000,000 aggregate principal amount.
The Indenture does not limit other debt of the Company, secured or unsecured,
including Senior Indebtedness.

5. Purchase of Securities at Option of Holder Upon a Change of 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 no less than 30 days and not more than 60 days
after notice of the occurrence of a Change of Control is given as provided in
Section 4.07, at a purchase price equal to 100% of the principal amount thereof
together with accrued interest up to, but excluding, the Change of Control
Purchase Date. The Holder shall have the right to withdraw any Change of
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 of Control Purchase
Date by delivering a written notice of withdrawal to the Paying Agent in
accordance with the terms of the Indenture.

6. 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 ADSs at any time prior to the close of business on the
Business Day immediately preceding June 1, 2008; provided, however, that if the
Security is subject to purchase upon a Change of Control, the conversion right
will terminate at the close of business on the Business Day immediately
preceding the Change of Control Purchase Date for such Security or such earlier
date as the Holder presents such Security for purchase (unless the Company
shall default in making the Change of Control Purchase Price 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 purchased). The initial Conversion
Price is $9.267, subject to adjustment under certain circumstances. The ADSs,
when issued, shall be subject to the terms of the Deposit Agreement. The
number of ADSs issuable upon conversion of a Security is determined by dividing
the principal amount of the Security or portion thereof being converted by the
Conversion Price in effect on the Conversion Date. No fractional ADSs will be
issued upon conversion; in lieu thereof, an amount will be paid in cash based
upon the ADS Closing Price on the Trading Day immediately prior to

A-8

 

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. The Conversion Agent shall use commercially reasonable efforts to
procure the completion of Part II of the Conversion Notice by the Holder who
converts a Security. The Conversion Agent shall promptly, but in no event
later than two Business Days following the Conversion Date, deliver a copy of
such duly completed Conversion Notice to the ADS Depositary, the Custodian (as
defined in the Deposit Agreement), the Company and counsel to the Company.
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 subject to purchase following a Change of Control 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. 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 of Control Purchase Notice exercising the option of such
Holder to require the Company to purchase such Security may be converted only
if the Change of Control Purchase Notice is withdrawn in accordance with the
terms of the Indenture.

7. 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 any instrument relating to the Senior
Indebtedness or any extension or renewal of the Senior Indebtedness.

8. 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.

A-9

 

9. Persons Deemed Owners

     The Holder of a Security may be treated as the owner of it for all
purposes.

10. 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.

11. 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.

12. 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.

13. Defaults and Remedies

     Under the Indenture, an Event of Default includes: (1) the Company
defaults in any payment of interest on any Security when the same becomes due
and payable, whether or not such payment shall be prohibited by Article 11, and
such default continues for a period of 30 days; (2) the Company (i) defaults in
the payment of the principal of any Security when the same becomes due and
payable at its Stated Maturity, upon declaration of acceleration or otherwise,
whether or not such payment shall be prohibited by Article 11 or (ii) fails to
purchase Securities when required pursuant to this Indenture or the Securities,
whether or not such purchase shall be prohibited by Article 11; (3) the Company
fails to comply with its obligations with respect to a Change of Control in
accordance with Sections 4.07, 4.08, 4.09, 4.10 and 4.11 (other than its
obligation to purchase securities properly submitted for purchase); (4) the
Company fails to comply with its obligations under Section 6.01; (5) the
Company or Parent fails to comply with any of its agreements in the Securities
or the Indenture (other than those referred to in clauses (1) through (4)
above) and such failure continues for 60 days after the notice specified below;
or (6) the Company or Parent pursuant to or within the meaning of any
Bankruptcy Law: (A) commences a voluntary case; (B) consents to the entry of an
order for relief against it in an involuntary case; (C) consents to the
appointment of a Custodian of it or for a substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors; (7) a court of

A-10

 

competent jurisdiction enters an order or decree under any Bankruptcy Law
that: (A) is for relief against the Company or Parent in an involuntary case;
(B) appoints a Custodian of the Company or Parent or for all or substantially
all of its property; or (C) orders the winding up or liquidation of the Company
or Parent; and the order or decree remains unstayed and in effect for 60 days
(together with Clause (6), the “bankruptcy provisions”); and (8) Indebtedness
of the Company is not paid within 15 days of any applicable grace period after
final maturity or is accelerated by the holders thereof because of a default
and the total amount of such Indebtedness unpaid or accelerated exceeds $15.0
million (the “cross acceleration provision”).

     If an Event of Default (other than an event of default as described in
clauses (6) and (7) with respect to 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 or as described in clauses (6) and (7) herein, 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.

14. Trustee Dealings with the Company

     U.S. Bank National Association, 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.

15. No Recourse Against Others

     A director, officer, employee or shareholder, as such, of the Company or
Parent shall not have any liability for any obligations of the Company or
Parent 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.

16. 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.

A-11

 

17. 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.

18. 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, California 94538, Attention: Corporate Secretary.

A-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, as amended.

A-13

 

CHIPPAC, INC. (the “Company”)

US$150,000,000

2.50% Convertible Subordinated Notes due 2008

(CUSIP No.       )

CONVERSION NOTICE

PART I

     To convert this security (the “Security”) into ST Assembly Test Services
Ltd (the “Parent”) Ordinary Shares represented by American Depositary Shares
(“ADSs”), check this box: o

     To convert only part of this Security, state the principal amount to be
converted (must be $1,000 or a multiple of $1,000): $                    .

PART II

	A.	 	If you wish to receive ADSs upon conversion of your Securities, check and
complete items 1. OR 2. below.
	 
	1.	 	Check here o and complete the grid below if you are requesting conversion
of your Securities for ADSs AND the ADSs have been sold to a third party
pursuant to an effective registration statement under the Securities Act:
	 
	 	 	Deliver ADSs (CUSIP No. 85771T104) to:

	 
	Name of DTC Participant:

	 

	DTC Participant Account No.:

	 

	Account No. for Purchaser at DTC Participant (f/b/o information):

	 

	Onward Delivery instructions to Purchaser:

	 

	Contact person at DTC Participant:

	 

	Daytime Telephone Number of contact person at DTC Participant:

             By checking above and completing the above grid, I/we (i) represent that
I/we am/are not acting on behalf of Parent, the Company or any affiliate of
either Parent or the Company and that the ADSs to be delivered upon conversion
of my/our Securities have been sold pursuant to a resale registration statement
which has been declared effective under the

A-14

 

Securities Act (and which continues to be effective at the time of transfer),
and (ii) certify that the prospectus delivery requirements, if any, of the
Securities Act have been satisfied with respect to the sale described above and
that the person who signed this Conversion Notice is the beneficial owner of
the Securities surrendered herewith and is named as a selling securityholder in
the applicable Prospectus or in amendments or supplements thereto, and that the
number of ADSs transferred are all or a portion of the ADSs listed in such
Prospectus, as amended or supplemented opposite such owner’s name. Details of
my/our designee to receive such ADSs are set forth above.

OR

	2.	 	Check here o and complete the grid below if you are requesting conversion
of your Securities (without concurrent resale under a resale registration
statement) into Restricted ADSs:

	 
	Deliver Restricted ADR (CUSIP No. 85227G888) to:

	 

	Name of Holder:

	 

	Address:

	 

	Tax ID Number:

	 

	Fax Number:

	 

	Daytime Telephone No.:

	 

	Federal Express Account No.:*

	 	*	 	The Restricted ADR(s) will be mailed by U.S. mail unless a
Federal Express Account number is included above.
	 
	 	**	 	Upon receipt of this Conversion Notice, the Conversion Agent
will complete this Conversion Notice, and will promptly, but in any
event not later than two business days following the Conversion
Date, fax the completed Conversion Notice to the ADS Depositary and
the Custodian as specified herein.

     By checking and completing the grid above, I/we (x) represent and agree
that, at the time of signing and delivery of this Conversion Notice, I/we
am/are, or the person who has the beneficial interest in such Securities is,
not Parent, the Company or an affiliate of either Parent or the Company and (i)
is not a U.S. Person (within the meaning of Regulation S under the Securities
Act (“Regulation S”)) and I/we, or such person, purchased such Securities, or
the beneficial interest therein, in a transaction made in accordance with
Regulation S, (ii) is a “qualified institutional buyer” (“QIB”) within the
meaning of Rule 144A under the Securities Act, or (iii) is an “accredited
investor” within the meaning of Regulation D under the Securities Act, (y)
understand that ADSs issued upon conversion of the Securities have not been and
will

A-15

 

not be registered under the Securities Act, and (z) agrees that such ADSs
will be issued in the form of certificated Restricted ADR(s) and may not be
offered, sold, pledged or otherwise transferred except (A) (1) pursuant to Rule
144A under the Securities Act to a person that the holder reasonably believes
is a QIB within the meaning of Rule 144A, (2) in an offshore transaction to a
non-U.S. person made in accordance with Regulation S, (3) pursuant to an
effective registration statement under the Securities Act, or (4) pursuant to
an exemption from registration under the Securities Act and (B) in accordance
with any applicable securities laws of any state of the United States and the
applicable laws of any other jurisdiction. The undersigned understands that
the Restricted ADSs are subject to the terms of a Letter Agreement, dated as of
August 4, 2004, by and between Parent and Citibank, N.A., as ADS Depositary,
which sets forth the restrictions applicable to the Restricted ADSs.

Please read and complete Items C through E below:

	B.	 	The Securities converted hereby and any documents required in relation to
the declarations below or to verify the same accompany this form.
	 
	C.	 	I/we hereby declare that I/we have been notified by Parent that Parent’s
register of shareholders may be closed from time to time. I/We hereby
declare that any applicable condition to conversion of the Securities, if
any, has been complied with by me/us, that I/we am/are not acting on
behalf of Parent, the Company or an affiliate of either.
	 
	D.	 	I/We hereby declare that all stamp, issue, registration or similar taxes
and duties payable on conversion of the Securities in the jurisdiction
where the Securities are delivered to the Conversion Agent have been paid.
	 
	E.	 	Converting Securityholder Information and Signature:
	 
	 	 	Please complete the following information with respect to the converting
Securityholder:

	 
	Name:

	Date:

	Address:

	 
	Telephone Number:

	Signature:

	 	 	 
	*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, as amended.

A-16

 

For Conversion Agent’s use only:

	 	 	 	 	 
	1.

	 	(A)
	 	Securities conversion identification reference: ChipPAC, Inc. 2.50% Convertible
Subordinated Notes due 2008
 (CUSIP                    )
	 
	 	 	 	 
	

	 	(B)
	 	Deposit Date:                                                                                                                                                                   
	 
	 	 	 	 
	

	 	(C)
	 	Conversion Date:    
                           
                                                                                                                           
	 
	 	 	 	 
	2.

	 	(A)
	 	Aggregate principal amount of
Securities deposited for conversion:       
                                                                    
	 
	 	 	 	 
	

	 	(B)
	 	Conversion Price on Conversion Date:                                                                                                                          
	 
	 	 	 	 
	

	 	(C)
	 	Number of ADSs deliverable:
                            
                                                                                                          
	

	 	 	 	(disregard fractions)
	 
	 	 	 	 
	

	 	(D)
	 	Number of Restricted ADSs
deliverable:                                                                                                                       
	

	 	 	 	(disregard fractions)
	 
	 	 	 	 
	N.B.

	 	 
	 	The Conversion Agent must complete items 1 and 2.
	 
	 	 	 	 
	

	 	 	 	Upon receipt, a copy of this Conversion Notice shall be forwarded to:

	 	 	 	 	 
	

	 	a)
	 	Citibank, N.A.
	

	 	 	 	ADR Department
	

	 	 	 	15th Floor
	

	 	 	 	111 Wall Street
	

	 	 	 	New York, New York 10043
	

	 	 	 	Attn: Rosanne Devonshire
	

	 	 	 	Facsimile No: (212) 825-2029
	 
	 	 	 	 
	

	 	b)
	 	Citibank N.A. – Singapore
	

	 	 	 	300 Tampines Avenue 5
	

	 	 	 	#07-00 Tampines Junction
	

	 	 	 	Singapore, 529653
	

	 	 	 	Facsimile No.: 011-65-6426-8661

                    Notwithstanding anything herein to the contrary, Ordinary Shares which
would be represented by a fraction of one ADS shall not be issuable by the
Company or deposited with the Custodian or the ADS Depositary.

A-17

 

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 of Control, 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 of 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, as amended.
	 
	 	 	 	 
	

	 	 	 	

	

	 	 	 	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.

A-18

 

SCHEDULE OF EXCHANGES OF SECURITIES4

     The following exchanges, repurchases or conversions of a part of this
global Security have been made:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Principal Amount	 	 	 	 	 	Amount of	 	Amount of
	 	 	 	 	of this Global	 	Authorized	 	Decrease in	 	Increase in
	 	 	 	 	Security Following	 	Signatory of	 	Principal Amount	 	Principal Amount
	Date of	 	Such Decrease (or	 	Securities	 	of this Global	 	of this Global
	Exchange
	 	Increase)
	 	Custodian
	 	Security
	 	Security

	4	 	 This schedule should be included only if the Security is a Global Security.

A-19

 

CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION

OF TRANSFER OF TRANSFER RESTRICTED SECURITIES5

	 	 	Re: 2.50% Convertible Subordinated Securities Due 2008 (the “Securities”) of ChipPAC, Inc.

     This certificate relates to $                    principal amount of Securities
owned in (check applicable box)

	 	 	 
	o book-entry or

	 	o 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 2.08 of the
Indenture dated as of May 28, 2003, between ChipPAC, Inc. and U.S. Bank
National Association (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):

	 	 	 
	o

	 	Such Security is being transferred pursuant to an effective
registration statement under the Securities Act.
	 
	 	 
	o

	 	Such Security is being transferred to the Company.
	 
	 	 
	o

	 	Such Security is being transferred inside the United States 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.
	 
	 	 
	o

	 	Such Security is being transferred outside the United States in an
offshore transaction within the meaning of Regulation S under the
Securities Act in compliance with Rule 904 under the Securities
Act.
	 
	 	 
	o

	 	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.

	5	 	This certificate should only be included if this Security is a Transfer Restricted Security.

A-20

 

	 	 	 
	o

	 	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.

     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)

A-21

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