Collateral Sharing Agreement

EXHIBIT 10.53


EXECUTION COPY


COLLATERAL SHARING AGREEMENT


COLLATERAL SHARING AGREEMENT dated
as of March 3, 2003, among JPMORGAN CHASE
BANK, as Collateral Agent, WELLS FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION, as Trustee,
ON SEMICONDUCTOR CORPORATION and
SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC.


W I T N E S S E T H :


WHEREAS, the Companies (such term and each other capitalized term used herein having the meanings set forth in Section 1 below), certain lenders, and JPMorgan Chase Bank, as administrative agent, collateral agent and syndication agent, are parties to the Credit Agreement dated as of August 4, 1999, as amended and restated as of April 3, 2000;


WHEREAS, the Companies and the Trustee have entered into the Indenture dated as of March 3, 2003 (as amended, supplemented or otherwise modified from time to time, the "Indenture"), pursuant to which the Companies intend to issue the Notes;


WHEREAS, the Companies and certain lenders under the Credit Agreement referred to above have entered into an Amendment and Restatement Agreement dated as of February 14, 2003 (the "Amendment and Restatement Agreement"), to amend and restate the Credit Agreement referred to above as of February 14, 2003 (such Credit Agreement, as further amended, supplemented or otherwise modified from time to time, the "Existing Credit Agreement") in order to, among other things, permit, subject to certain terms and conditions, (a) the issuance of the Notes by the Companies and (b) the amendment of the Security Documents to provide for securing the Noteholder Claims thereunder; and


WHEREAS, it is a condition precedent to the effectiveness of the amendments contemplated by the Amendment and Restatement Agreement that the parties hereto enter into this Agreement;


NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:


SECTION 1. (a) DEFINITIONS. As used in this Agreement, the following terms have the meanings specified below:


"Administrative Agent" means JPMorgan Chase Bank, in its capacity as the administrative agent under the Existing Credit Agreement.


"Affiliate" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. Notwithstanding the foregoing, no individual shall be deemed to be an Affiliate of a Person solely by reason of his or her being an officer or director of such Person.


"Amendment and Restatement Agreement" has the meaning set forth in the recitals hereto.


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"Applicable Secured Documents" means (a) in respect of any Noteholder Claims, the Noteholder Documents and (b) in respect of any Senior Lender Claims, the relevant Senior Loan Documents or other documents governing such Senior Lender Claims.


"Bank Indebtedness" means any and all amounts payable under or in respect of the Credit Agreement and any Refinancing Indebtedness (as defined in the Indenture) with respect thereto, as amended from time to time, including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to either Company whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof. It is understood and agreed that Refinancing Indebtedness (as defined in the Indenture) in respect of the Credit Agreement may be Incurred (as defined in the Indenture) from time to time after termination of the Credit Agreement.


"Bankruptcy Law" means Title 11 of the United States Code and any similar Federal, state or foreign law for the relief of debtors.


"Business Day" means any day other than a Saturday, a Sunday or a day that is a legal holiday under the laws of the State of New York or on which banking institutions in the State of New York are required or authorized by law or other governmental action to close.


"Cash Management Obligations" means, with respect to any Person, all Obligations of such Person in respect of overdrafts and related liabilities owed to any other Person that arise from treasury, depositary or cash management services in connection with any automated clearing house transfers of funds or any similar transactions.


"Collateral" means all assets or property of the Grantors, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document.


"Collateral Account" has the meaning set forth in Section 4.1.


"Collateral Agent" means JPMorgan Chase Bank, in its capacity as collateral agent under the Security Documents and this Agreement.


"Collateral Agent Fees" means all fees, costs and expenses of, and other amounts owing to, the Collateral Agent of the types referred to in Section 2.4.


"Collateral Estate" has the meaning set forth in Section 2.1(b).


"Commodity Hedge Obligations" means, with respect to any Person, all Obligations of such Person in respect of any commodity price protection agreement or other commodity price hedging arrangement or other similar agreement or arrangement.


"Companies" means Holdings and SCI.


"Credit Agreement" means the Existing Credit Agreement and all other Loan Documents (as defined therein) and any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof (except to the extent that any such amendment, supplement, modification, extension, renewal, restatement or refunding would be prohibited by the terms of the Indenture, unless otherwise agreed to by the Holders of at least a majority in aggregate principal amount of Notes at the


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time outstanding) and any indentures or credit facilities or commercial paper facilities with banks or other institutional lenders that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof.


"Credit Facilities" means one or more debt facilities (including the Credit Agreement) or commercial paper facilities providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables) or letters of credit, or any debt securities or other form of debt financing (including convertible or exchangeable debt instruments), in each case, as amended, supplemented, modified, extended, renewed, restated or refunded in whole or in part from time to time.


"Discharge of Senior Credit Agreement Claims" means, except to the extent otherwise provided in Section 5.2, payment in full in cash of (a) the principal of and interest and premium, if any, on all Indebtedness outstanding under the Senior Credit Agreement constituting Senior Lender Claims or, with respect to letters of credit outstanding thereunder, delivery of cash collateral or backstop letters of credit in respect thereof in compliance with the Senior Credit Agreement, in each case after or concurrently with termination of all commitments to extend credit thereunder and (b) any other Senior Lender Claims that are due and payable or otherwise accrued and owing under the Senior Credit Agreement at or prior to the time such principal, interest and premium, if any, are paid.


"Discharge of Senior Lender Claims" means payment in full in cash of (a) the principal of and interest and premium, if any, on all Indebtedness outstanding under the First-Lien Credit Facilities or, with respect to Hedging Obligations, Commodity Hedge Obligations or letters of credit outstanding thereunder, delivery of cash collateral or backstop letters of credit in respect thereof in compliance with such First-Lien Credit Facilities, as applicable, in each case after or concurrently with termination of all commitments to extend credit thereunder and (b) any other Senior Lender Claims that are due and payable or otherwise accrued and owing at or prior to the time such principal, interest and premium, if any, are paid.


"Distribution Date" means each date fixed by the Collateral Agent in its sole discretion for a distribution pursuant to the applicable provisions of this Agreement of any funds held in the Collateral Account.


"Existing Credit Agreement" has the meaning set forth in the recitals hereto.


"First-Lien Credit Facilities" means (a) the Credit Facilities provided pursuant to the Credit Agreement and (b) any other Credit Facility, that, in the case of both clauses (a) and (b), is secured by a Permitted Lien (as defined in the Indenture) described in clause (a) or (e) of the definition thereof and (except for the Credit Facilities provided pursuant to the Existing Credit Agreement) is designated by the Companies as a "First-Lien Credit Facility" for purposes of the Indenture.


"Future First-Lien Credit Facility" means any First-Lien Credit Facility (other than the Existing Credit Agreement), provided that the Required Lenders under any Senior Credit Agreement then in effect have consented to the designation of such Credit Facilities as a "First-Lien Credit Facility".


"Future Other First-Lien Obligations" means all Obligations of either Company or any other Grantor, to a creditor under a First-Lien Credit Facility, in respect of Cash Management Obligations or Hedging Obligations that are designated by the Companies as "Credit Agreement Obligations" for purposes of the Indenture (other than any Senior Lender Cash Management Obligations and Senior


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Lender Hedging Obligations); provided that the Required Lenders under any Senior Credit Agreement then in effect have consented to such designation.


"Grantors" means each of the Companies and the Subsidiaries that has executed and delivered a Security Document.


"Hedging Obligations" means, with respect to any Person, the Obligations of such Person in respect of (a) interest rate or currency swap agreements, interest rate or currency cap agreements, interest rate or currency collar agreements, (b) other agreements or arrangements designed to protect such Person against fluctuations in interest rates and/or currency exchange rates or (c) Commodity Hedge Obligations.


"Holdings" means ON Semiconductor Corporation, a Delaware corporation.


"Indebtedness" means and includes all Obligations that constitute "Indebtedness" within the meaning of the Indenture or the Senior Credit Agreement.


"Indenture" has the meaning set forth in the recitals hereto.


"Insolvency or Liquidation Proceeding" means (a) any voluntary or involuntary case or proceeding under any Bankruptcy Law with respect to any Grantor, (b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with respect to any of their respective assets, (c) any liquidation, dissolution, reorganization or winding up of any Grantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy or (d) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of any Grantor.


"Instructing Group" means, until the Discharge of Senior Credit Agreement Claims has occurred, the Required Lenders, and thereafter, the Majority Secured Parties.


"Intercreditor Agreement" means the Intercreditor Agreement dated as of May 6, 2002, among JPMorgan Chase Bank, as credit agent, Wells Fargo Bank Minnesota, National Association, as trustee, and the Companies.


"Lien" means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.


"Loan Parties" means the Companies and the other Grantors.


"Majority Secured Parties" means, at any time, the Secured Party or Secured Parties, acting through its (or their) respective Representative, holding more than 50% of the aggregate amount of the Secured Obligations then outstanding. In calculating the aggregate amount of the Secured Obligations then outstanding represented by each Representative, (a) the amount of Indebtedness outstanding shall be that reflected on the applicable debtor's balance sheet, as determined in accordance with GAAP, (b) the amount outstanding in respect of a letter of credit shall be the face amount of such letter of credit and (c) the amount outstanding in respect of Hedging Obligations or Cash Management Obligations shall be


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the amount which would be due and payable to a Secured Party holding such Hedging Obligations or Cash Management Obligations, as applicable, if such Hedging Obligations or Cash Management Obligations were then terminated.


"Noteholder Claims" means all Obligations in respect of the Notes and the guarantees of the Notes or arising under the Noteholder Documents or any of them.


"Noteholder Documents" means (a) the Indenture and the Notes and (b) any other related document or instrument executed and delivered pursuant to any Noteholder Document described in clause (a) above evidencing or governing any Obligations thereunder. Notwithstanding the foregoing, for purposes of this Agreement, "Noteholder Documents" shall be deemed to exclude the Security Documents.
"Noteholders" means the Persons holding Noteholder Claims.


"Notes" means (a) the 12% Senior Secured Notes due 2010 to be issued by the Companies as co-issuers, (b) the exchange notes issued in exchange therefor as contemplated by the Registration Rights Agreement dated as of March 3, 2003, among Holdings, SCI and the Initial Purchasers (as defined therein) and (c) any additional notes issued under the Indenture by the Companies as co-issuers, to the extent permitted by the Indenture and the Senior Credit Agreement.


"Obligations" means any and all obligations with respect to the payment of (a) any principal of or interest (including interest accruing on or after the commencement of any Insolvency or Liquidation Proceeding, whether or not a claim for post-filing interest is allowed in such proceeding) or premium on any Indebtedness, including any reimbursement obligation in respect of any letter of credit, (b) any fees, indemnification obligations, expense reimbursement obligations or other liabilities payable under the documentation governing any Indebtedness, (c) any obligation to post cash collateral in respect of letters of credit and any other obligations or (d) any Cash Management Obligations or Hedging Obligations.


"Other Secured Parties" means the Secured Parties holding Secured Obligations other than Secured Obligations under the Senior Credit Agreement.


"Permitted Investments" means:


(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America);


(b) investments in commercial paper maturing not more than one
year after the date of acquisition thereof and having, at such date of
acquisition, one of the two highest credit ratings obtainable from
Standard & Poor's Rating Service or from Moody's Investor Service,
Inc.;


(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing not more than one year after the
date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts and overnight bank deposits issued or
offered by, any commercial bank organized under the laws of the United
States of America or any state thereof or any foreign country
recognized by the United States of America that has a combined capital
and surplus and undivided profits of not less than $250,000,000 (or the
foreign-currency equivalent thereof);


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(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above or
clause (e) or (f) below and entered into with a financial institution
satisfying the criteria described in clause (c) above;


(e) securities issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof having maturities of not more than six months
from the date of acquisition thereof and, at the time of acquisition,
having one of the two highest credit ratings obtainable from Standard &
Poor's Rating Service or from Moody's Investor Service, Inc.;


(f) securities issued by any foreign government or any
political subdivision of any foreign government or any public
instrumentality thereof having maturities of not more than six months
from the date of acquisition thereof and, at the time of acquisition,
having one of the two highest credit ratings obtainable from Standard &
Poor's Rating Service or from Moody's Investor Service, Inc.; and


(g) investments in funds that invest solely in one or more
types of securities described in clauses (a), (e) and (f) above.


"Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, entity or other party, including any government and any political subdivision, agency or instrumentality thereof.


"Pledged Collateral" means (a) the "Pledged Securities" under, and as defined in, the Pledge Agreement (as defined in the Existing Credit Agreement and the Indenture), and (b) any other Collateral in the possession of the Collateral Agent (or its agents or bailees), to the extent that possession thereof is necessary to perfect a Lien thereon under the Uniform Commercial Code.


"Recovery" has the meaning set forth in Section 6.4 hereof.


"Related Parties" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates.


"Representatives" means (a) in respect of any of the Senior Lender Claims under the Existing Credit Agreement, the Administrative Agent, (b) in respect of any other Senior Lender Claims, the agent or trustee in respect thereof (or, if there is no agent or trustee, the holder or holders thereof) and (c) in respect of any of the Noteholder Claims, the Trustee.


"Required Lenders" means, with respect to any amendment, modification, termination, waiver, consent, direction or other action, those Senior Lenders the approval of which is required pursuant to the Senior Loan Documents to approve such amendment, modification, termination, waiver, consent, direction or other action.


"SCI" means Semiconductor Components Industries, LLC, a Delaware limited liability company.


"Second-Lien Notes" means the $300.0 million aggregate principal amount of 12.0% senior secured notes issued by the Companies on May 6, 2002 and the exchange notes issued or to be issued in exchange therefor.


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"Secured Obligations" means, without duplication, (a) the Senior Lender Claims and (b) the Noteholder Claims.


"Secured Parties" means (a) the Senior Lenders, (b) the Administrative Agent, (c) the Collateral Agent, and (d) the Trustee, for the benefit of the holders from time to time of the Noteholder Claims.


"Security Documents" means the Security Documents (as defined in the Existing Credit Agreement and the Indenture) and any other agreement, document or instrument pursuant to which a Lien is granted securing any Senior Lender Claims or Noteholder Claims or under which rights or remedies with respect to such Liens are governed.


"Senior Credit Agreement" means the Existing Credit Agreement; provided that if at any time a Discharge of Senior Credit Agreement Claims occurs with respect to the Existing Credit Agreement (without giving effect to Section 5.2), then, to the extent provided in Section 5.2, the term "Senior Credit Agreement" means the Future First-Lien Credit Facility designated by the Companies as the "Senior Credit Agreement" in accordance with such Section.


"Senior Credit Agreement Lender" means any Senior Lender that holds any Senior Lender Claim under the Senior Credit Agreement.


"Senior Lender Cash Management Obligations" means any Cash Management Obligations secured by any Collateral under the Security Documents.


"Senior Lender Claims" means (a) all Bank Indebtedness and all other Indebtedness outstanding under one or more of the Senior Loan Documents, including any Future First-Lien Credit Facilities, the Indebtedness under each of which (i) constitutes Permitted Debt (as defined in the Indenture) or is otherwise permitted by the Indenture, (ii) is designated by the Companies as "Credit Agreement Obligations" for purposes of the Indenture and (iii) is secured by a Permitted Lien (as defined in the Indenture) described in clause (a) or (e) of the definition thereof, (b) all other Obligations (not constituting Indebtedness) of either Company or any Grantor under the Senior Loan Documents or any such other Future First-Lien Credit Facility, including all Senior Lender Hedging Obligations and Senior Lender Cash Management Obligations and (c) all Future Other First-Lien Obligations. Senior Lender Claims shall include all interest accrued or accruing (or which would, absent the commencement of an Insolvency or Liquidation Proceeding, accrue) after the commencement of an Insolvency or Liquidation Proceeding in accordance with and at the rate specified in the relevant Senior Loan Document whether or not the claim for such interest is allowed as a claim in such Insolvency or Liquidation Proceeding. To the extent any payment with respect to the Senior Lender Claims (whether by or on behalf of any Grantor, as proceeds of security, enforcement of any right of set-off or otherwise) is declared to be fraudulent or preferential in any respect, set aside or required to be paid to a debtor in possession, trustee, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. Notwithstanding anything to the contrary contained in the first sentence of this definition, any Obligation under the Senior Loan Documents or any Future First-Lien Credit Facility (including any Cash Management Obligations or Hedging Obligations) shall constitute a "Senior Lender Claim" if the Collateral Agent or the relevant Senior Lender or Senior Lenders shall have received a written representation from either Company in or in connection with the execution of such Senior Loan Documents evidencing such Obligation that such Obligation constitutes a "Credit Agreement Obligation" under and as defined in the Indenture (whether or not such Obligation is at any time determined not to have been permitted to be incurred under the Indenture).


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"Senior Lender Hedging Obligations" means any Hedging Obligations secured by any Collateral under the Security Documents.


"Senior Lenders" means the Persons holding Senior Lender Claims.


"Senior Loan Documents" means the Senior Credit Agreement, and each of the other agreements, documents and instruments (including each agreement, document or instrument providing for or evidencing a Senior Lender Hedging Obligation or Senior Lender Cash Management Obligation) providing for or evidencing any other Obligation under the Credit Agreement or any Future First-Lien Credit Facility or any Future Other First-Lien Obligations, and any other related document or instrument executed or delivered pursuant to any Senior Loan Document at any time or otherwise evidencing any Senior Lender Claims. Notwithstanding the foregoing, for purposes of this Agreement, "Senior Loan Documents" shall be deemed to exclude the Security Documents.


"Senior Subordinated Notes" means the $400.0 million aggregate principal amount of 12.0% senior subordinated notes issued by the Companies on August 4, 1999 and the exchange notes issued in exchange therefor.


"Subsidiary" means any "Subsidiary" of either Company, as defined in the Indenture or the Senior Credit Agreement.


"Trustee" means Wells Fargo Bank Minnesota, National Association, in its capacity as trustee under the Indenture.


"Uniform Commercial Code" or "UCC" means the Uniform Commercial Code as from time to time in effect in the State of New York.


(b) Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified, (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provisio ...