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1.
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Defined
Terms. Unless otherwise specifically defined herein,
each term used herein that is defined in the Note shall have the meaning
assigned to such term in the Note.
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2.
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Amendment. Subject
to Section 3 hereof, the following amendments shall be made to the
Note:
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a.
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Principal
Amount. For all purposes of the Note, the aggregate
principal amount of the Note shall be amended to be
“US$5,656,714.00.”
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b.
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Maturity
Date. The phrase “August 15, 2008” as the definition of
“Maturity Date” in the initial paragraph of the Note is amended and
restated to read “June 1, 2009.”
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c.
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Exchange
Agreement. The defined term “Exchange Agreement” shall
be amended to mean “the Amended and Restated Exchange Agreement, dated as
of
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August
15, 2008, by and among the Company, Holdings and the Holder, as amended,
restated, supplemented or otherwise modified pursuant to the terms thereof
from time to time.”
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d.
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Nasdaq. The
defined term “Nasdaq” shall be amended to mean “the Nasdaq Capital
Market.”
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e.
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Senior Credit
Facility. The defined term “Senior Credit Facility”
shall be amended to mean “(a) the $10 million Revolving Facility Agreement
among the Company and PSi Technologies Laguna, Inc., as Borrowers, and
Raiffeisen Zentralbank Oesterreich AG (“RZB-Austria”), Singapore
Branch, as Bank, dated September 24, 2003, including any extensions,
renewals or refinancings thereof on the same terms that currently exist;
(b) the revolving facility for a promissory note of $3 million including
the availability of a letter of credit up to $1.5 million between the
Company and Philippine Veterans Bank (“PVB”), dated July 13,
2006, including any extensions, renewals or refinancings thereof on the
same terms and for the same amount that currently exist and the expected
guarantee by the Philippine Export Import Credit Agency (“PhilEXIM”) of the
facility; and (c) the proposed additional credit facility between the
Company, PSi Technologies Laguna, Inc., PVB and Bank of Commerce
guaranteed by PhilEXIM in the principal amount of not more than $15
million.”
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f.
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Section
2.05(a). Section 2.05(a) shall be amended to read as
follows: “In the event that, at any time after
August 15, 2008, for a 30-consecutive trading day period the
ADSs trading on Nasdaq, or any other trading facility on which the ADSs
are listed, (i) shall have traded at an average closing price of at least
$0.70 per ADS
and (ii) the daily average trading volume of the ADSs shall have been
equal to at least 33.33% of the number of shares of Common Stock issuable
pursuant to the Exchange Agreement, the Company may at its option send
written notice (the “Redemption Notice”) to
the Holders indicating that the Company desires to redeem all but not less
than all of the outstanding Notes, specifying the date of such redemption,
which shall be not earlier than 30 days after the date of the
Redemption Notice (the “Redemption Date”), the
redemption price, which shall be equal to the aggregate principal amount
outstanding on the Note plus all accrued and unpaid interest thereon (the
“Redemption
Price”), and the fulfillment of clauses (i) and (ii)
above.”
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g.
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Section
4.01(c)(i). Section 4.01(c)(i) shall be amended to read
as follows: “The Company or any of its Subsidiaries shall generally not
pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; provided, however, that
all long-term non-interest bearing payables owed by the Company and its
Subsidiaries to equipment suppliers shall not be deemed due pursuant to
this subsection (c)(i) until the receipt by the Company or any of its
Subsidiaries of a letter from an equipment supplier notifying the Company
or its Subsidiary of its intention to commence legal proceedings with
respect to such nonpayment of
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Indebtedness
or payables, as applicable, except that if such nonpayment to an equipment
supplier is only the result of a dispute between the Company and such
equipment supplier regarding the quality of equipment for which such
supplier has not received payment, such nonpayment shall not constitute a
default hereunder until a court of competent jurisdiction shall have
determined such payment is legally owed by the Company to such equipment
supplier; provided, further that
the disputed electrical bills related to the underbilling by Meralco
Electric Company shall not constitute a default hereunder until a court of
competent jurisdiction shall have determined such electrical bills are
legally owed by the Company to Meralco Electrical Company, and either such
determination is not appealable by the Company or the Company does not
appeal such determination;”
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h.
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Section
5.01. Section 5.01 shall be amended to read as follows:
“The Company agrees, and each Holder, by his acceptance of this Note, also
agrees, that this Note is and shall be subordinate, to the extent and in
the manner hereinafter set forth, to the prior payment in full of all
obligations of the Company now or hereafter existing under the Senior
Credit Facility and any other Indebtedness of the Company that is
permitted to be incurred pursuant to Section 3.02(e) and the terms of
which expressly provide it is senior in right of payment to the Notes,
whether for principal, interest (including, without limitation, interest,
as provided in such Indebtedness, accruing after the filing of a petition
initiating any proceeding referred to in Section 5.02, whether or not
such interest accrues after the filing of such petition for purposes of
the Bankruptcy Code or is an allowed claim in such proceeding), fees,
expenses or otherwise (all such obligations being the “Senior
Indebtedness”).
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3.
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Effectiveness. It
shall be a condition precedent to the effectiveness of this Amendment that
each of the following conditions are
satisfied:
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a.
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Amendment. The Holder’s
receipt of this Amendment, duly executed by the
Company.
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b.
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No Event of
Default. No Event of Default shall have occurred and be
continuing or shall result from this
Amendment.
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4.
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Representations
and Warranties. The Company hereby represents and
warrants to the Holder as follows:
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a.
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Due Authorization and
Enforceability. It has the authority to execute this
Amendment, and this Amendment has been duly authorized, executed and
delivered by it, and this Amendment constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its
terms.
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b.
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No Event of
Default. On and as of the date hereof, no Event of
Default exists.
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5.
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Miscellaneous.
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a.
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No Other
Amendments. Except as provided in Section 2 above,
nothing contained in this Amendment shall amend or otherwise modify the
terms of the Note, which shall remain in full force and
effect.
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b.
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Limitation on
Agreements. The amendments set forth herein are limited
precisely as written and shall not be deemed: (i) to be a consent under or
waiver of any other term or condition in any other agreement between the
Company and the Holder; or (ii) to prejudice any right or rights which the
Company or the Holder now has or may have in the future under, or in
connection with the Note, as amended hereby, or any of the other
agreements referred to herein or therein. From and after the
date hereof, all references in any other agreement between the Company and
the Holder to the Note shall be deemed to be references to the Note after
giving effect to this Amendment, and each reference to “hereof,”
“hereunder,” “herein” or “hereby” and each other similar reference and
each reference to “this Note” and each other similar reference contained
in the Note shall from and after the date hereof refer to the Note as
amended hereby.
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c.
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Ratification. The
Company hereby ratifies, confirms and agrees that, following the
effectiveness of this Amendment, the Note or any of the other documents or
actions referred to herein or therein shall continue to be binding against
each party and remain in full force and
effect.
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d.
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Headings. The
Section headings in this Amendment are inserted for convenience of
reference only and shall not affect the meaning or interpretation of this
Amendment or any provision hereof.
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e.
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Counterparts. This
Amendment may be executed in two or more counterparts, each of which shall
constitute an original but all of which when taken together shall
constitute but one document. Delivery of an executed
counterpart of a signature page to this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this
Amendment.
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f.
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GOVERNING LAW;
JURISDICTION. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK. IN ANY ACTION OR PROCEEDING ARISING OUT OF, RELATED TO,
OR IN CONNECTION WITH THIS AMENDMENT, THE PARTIES HERETO CONSENT TO BE
SUBJECT TO THE JURISDICTION AND VENUE OF (A) THE SUPREME COURT OF THE
STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK, AND (B) THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK. THE PARTIES HERETO CONSENT TO SERVICE OF PROCESS IN ANY
ACTION COMMENCED HEREUNDER BY ANY METHOD OR SERVICE ACCEPTABLE UNDER
FEDERAL LAW OR THE LAWS OF THE STATE OF NEW
YORK.
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COMPANY:
PSI
TECHNOLOGIES, INC.
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By: | /s/ | ||
| Name: | Arthur J. Young, Jr. | |||
| Title: | Chairman of the Board and Chief | |||
| Executive Officer | ||||
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HOLDER:
MERRILL
LYNCH GLOBAL EMERGING
MARKETS
PARTNERS, LLC
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By:
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Merrill Lynch Global Emerging Markets Partners, L.P., as its Managing Member | |||
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By:
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Merrill Lynch Global Capital, L.L.C., as its General Partner | |||
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By:
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Merrill Lynch Global Private Equity, Inc., as its Managing Partner | |||
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By: | /s/ | ||
| Name: | ||||
| Title: | ||||