FILED: NEW YORK COUNTY CLERK 03/31/ :06 AM INDEX NO /2017 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 03/31/2017

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1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X MARBLE RIDGE CAPITAL LP and KLS DIVERSIFIED ASSET MANAGEMENT LP, Plaintiffs, - against - GLOBAL A&T ELECTRONICS LTD., GLOBAL A&T FINCO LTD., UNITED TEST AND ASSEMBLY CENTER LTD., UTAC CAYMAN LTD., UTAC HONG KONG LIMITED, UTAC (TAIWAN) CORPORATION, UTAC THAI, LIMITED, UTAC THAI HOLDINGS LIMITED, NEWBRIDGE ASIA GENPAR IV ADVISORS, INC., TPG ASIA GENPAR V ADVISORS, INC., AFFINITY FUND III GENERAL PARTNER LIMITED, and COSTA ESMERALDA INVESTMENTS LIMITED on behalf of Itself and All Others Similarly Situated, Index No.: SUMMONS Date Index No. Purchased: Plaintiffs designate New York County as the place of trial Defendants X TO THE ABOVE NAMED DEFENDANTS. YOU ARE HEREBY SUMMONED to answer the complaint in this action and to serve a copy of your answer, or, if the complaint is not served with this summons, to serve a notice of appearance, on the Plaintiffs attorney within 20 days after the service of this summons, exclusive of the day of service (or within 30 days after the service is completed if this summons is not personally delivered to you within the State of New York); and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the complaint. 1 of 45

2 The basis for venue is CPLR 501 and CPLR 503(a) and (c) because the parties to the Indenture agreed to venue in the Borough of Manhattan and Plaintiff Marble Ridge Capital LP has its principal place of business in New York County, which is 111 West 33rd Street, New York, NY DATED: New York, New York March 31, 2017 BROWN RUDNICK LLP By: /s/ Sigmund S. Wissner-Gross Sigmund S. Wissner-Gross Seven Times Square New York, New York (212) Attorney for Plaintiffs TO: Global A&T Electronics Ltd. c/o Maples Corporate Services Limited P.O. Box 309, Ugland House South Church Street George Town Grand Cayman KY Cayman Islands Global A&T Finco Ltd. c/o The Corporation Trust Company Corporation Trust Center 1209 Orange St. Wilmington, DE United Test and Assembly Center Ltd. 5 Serangoon North Avenue 5 S(554916), Singapore 2 2 of 45

3 UTAC Cayman Ltd. c/o Maples Corporate Services Limited P.O. Box 309, Ugland House South Church Street George Town Grand Cayman KY Cayman Islands UTAC Hong Kong Limited Rm E 9/f Metex Hse 28 Fui Yiu Kok St. Tsuen Wan, Hong Kong UTAC (Taiwan) Corporation 2, Li-Hsin Rd. 3 Science-Based Industrial Park Hsinchu, Taiwan ROC UTAC Thai, Limited 237 Lasalle Rd., (Sukhumvit 105) Bangna, Bangkok 10260, Thailand UTAC Thai Holdings Limited 237 Lasalle Rd., (Sukhumvit 105) Bangna, Bankgkok 10260, Thailand Newbridge Asia GenPar IV Advisors, Inc. c/o Maples Corporate Services Limited P.O. Box 309, Ugland House South Church Street George Town Grand Cayman KY Cayman Islands TPG Asia GenPar V Advisors, Inc. c/o Maples Corporate Services Limited P.O. Box 309, Ugland House South Church Street George Town Grand Cayman KY Cayman Islands 3 3 of 45

4 Affinity Fund III General Partner Limited c/o Codan Trust Company (Cayman) Limited P.O. Box 2681 Cricket Square Hutchins Drive Grand Cayman KY1-111 Cayman Islands Costa Esmeralda Investments Limited c/o Codan Trust Company (Cayman) Limited P.O. Box 2681 Cricket Square Hutchins Drive Grand Cayman KY1-111 Cayman Islands of 45

5 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X MARBLE RIDGE CAPITAL LP and KLS DIVERSIFIED ASSET MANAGEMENT LP, Plaintiffs, - against - GLOBAL A&T ELECTRONICS LTD., GLOBAL A&T FINCO LTD., UNITED TEST AND ASSEMBLY CENTER LTD., UTAC CAYMAN LTD., UTAC HONG KONG LIMITED, UTAC (TAIWAN) CORPORATION, UTAC THAI, LIMITED, UTAC THAI HOLDINGS LIMITED, NEWBRIDGE ASIA GENPAR IV ADVISORS, INC., TPG ASIA GENPAR V ADVISORS, INC., AFFINITY FUND III GENERAL PARTNER LIMITED, and COSTA ESMERALDA INVESTMENTS LIMITED on behalf of Itself and All Others Similarly Situated, COMPLAINT Index No.: Defendants X Plaintiffs Marble Ridge Capital LP and KLS Diversified Asset Management LP (the Plaintiffs ), by and through their attorneys, Brown Rudnick LLP, for their Complaint against Defendants Global A&T Electronics Ltd. ( GATE or the Company ), Global A&T Finco Ltd. ( GATFIN ), United Test and Assembly Center Ltd. ( UTAC ), UTAC Cayman Ltd. ( UTAC Cayman ), UTAC Hong Kong Limited ( UTAC Hong Kong ), UTAC (Taiwan) Corporation ( UTAC Taiwan ), UTAC Thai Limited ( UTAC Thai ), UTAC Thai Holdings Limited ( UTAC Thai Holdings and, collectively with GATE, UTAC, UTAC Cayman, UTAC Hong Kong, UTAC Taiwan and UTAC Thai, the GATE Defendants ), Newbridge Asia GenPar IV Advisors, Inc. ( TPG Newbridge ), TPG Asia GenPar V Advisors, Inc. ( TPG Asia and, collectively with TPG Newbridge, TPG ), Affinity Fund III General Partner Limited 5 of 45

6 ( Affinity and, collectively with TPG, the Controlling Shareholder Defendants ), and Costa Esmeralda Investments Limited ( Costa ) on behalf of itself and all others similarly situated (the Junior Creditor Class Defendants and collectively with the GATE Defendants and the Controlling Shareholder Defendants, Defendants ), hereby allege as follows: NATURE OF THE ACTION 1. This action arises out of an improper debt exchange that unlawfully impaired the rights and priority of the holders of GATE s 10% senior secured notes due 2019 (the Senior Secured Notes ) for the benefit of GATE s junior creditors and controlling shareholders. 2. Plaintiffs are holders of GATE s Senior Secured Notes, 1 which are secured by first-priority liens on certain assets of GATE and its subsidiaries (the Collateral ), and are guaranteed by several GATE subsidiaries. 3. As of September 30, 2012, GATE had approximately US $531 million of outstanding secured junior indebtedness, consisting of a second-priority fixed-rate term loan and a second priority floating-rate term loan (the Junior Debt ). 4. The agreements governing the Senior Secured Notes, an intercreditor agreement dated October 30, 2007 (the Intercreditor Agreement ) and the indenture dated February 7, 2013 under which the Senior Secured Notes were issued (the Indenture ), established a priority structure between the Senior Secured notes and the Junior Debt, which expressly prohibited refinancing, replacement, or any other modification to the Junior Debt that would alter the priority structure between the Senior Secured Notes and the Junior Debt without consent of the holders of the Senior Secured Notes. 1 The Plaintiffs collectively hold in excess of 10% of the Notes. 2 6 of 45

7 5. In September 2013, GATE allowed its junior creditors, including one of its two controlling shareholders, to swap their subordinated second-priority debt, which had become impaired and effectively unsellable when the Company s financials began to deteriorate, for first-priority senior notes that purportedly rank pari passu with the Senior Secured Note (the Exchange ). 6. Another group of holders of GATE s Senior Secured Notes (the GSO Coastline Plaintiffs ) commenced an action before this Court against the above-named Defendants in February 2014 to redress the harm caused by the Defendants misconduct, entitled GSO Coastline Credit Partners LP, et al. v. Global A&T Electronics Ltd., et al., Index No /2014 (the GSO Coastline Action ). The GSO Coastline Plaintiffs Amended Complaint asserted thirteen causes of action against the Defendants, including breach of the Indenture and Intercreditor Agreement, tortious interference with a contract, fraud, and fraudulent inducement, and sought an injunction unwinding the Exchange or, alternatively, specific performance of the governing contracts, an award of monetary damages, and a declaratory judgment establishing that an event of default occurred and continues under the Indenture. 7. Defendants moved to dismiss the GSO Coastline Plaintiffs Amended Complaint in May In February 2015, the Court granted Defendants motions to dismiss in their entirety, dismissing all the GSO Coastline Plaintiffs causes of action against the Defendants. The GSO Coastline Plaintiffs then appealed the Courts decision to the Appellate Division of the Supreme Court of the State of New York, First Judicial Department (the Appellate Division ). 8. On May 3, 2016, the Appellate Division reversed the Court s dismissal of eight of the thirteen causes of action in the GSO Coastline Plaintiffs Amended Complaint, 3 7 of 45

8 thereby reinstating various the GSO Coastline Plaintiffs causes of action for alleged breach of provisions of the Indenture, breach of provisions of the Intercreditor Agreement, tortious interference, and declaratory judgment. 2 Specifically, the Appellate Division found that: a. The Amended Complaint stated a cause of action for breach of 2.2 and 3.2 of the Intercreditor Agreement, which, respectively, prohibit alteration of the priority scheme set forth in the Intercreditor Agreement and any actions that make any lien securing second-priority obligations pari passu with the Senior Secured Notes; b. The Amended Complaint stated a cause of action for breach of 4.12 and 4.18(b) of the Indenture, because GATE placed a new lien on the Collateral, which was not a Permitted Lien pursuant to the terms of the Indenture; c. The Amended Complaint stated a cause of action for breach of 4.16 of the Indenture, because the second amendment to the Intercreditor Agreement, which effectuated the issuance of additional notes as part of the Exchange, allegedly violated 4.16, which expressly provides that any increased indebtedness is subject to the terms of the Intercreditor Agreement; d. The Amended Complaint stated a cause of action for breach of 4.11 of the Indenture, because the GSO Coastline Plaintiffs alleged that GATE could have executed a debt exchange under more favorable terms in an arm s length transaction; 2 The Appellate Division issued a Revised Order on September 27, 2016, which did not differ materially from the order issued on May 3, of 45

9 e. Because the Amended Complaint stated a cause of action for breach of the Indenture, the cause of action for declaratory relief should be reinstated; f. The Amended Complaint stated a cause of action for tortious interference with the Indenture and Intercreditor Agreement and the controlling shareholder defendants may not rely on the economic interest defense to this cause of action because, in effectuating the Exchange, they were not acting to protect their legal or financial stake in GATE. 9. After the Appellate Division issued its order reinstating the majority of the GSO Coastline Plaintiffs causes of action, the Second Amended Complaint was filed, which is now the operative complaint in the GSO Coastline Action (the GSO Coastline Complaint ). 3 The GSO Coastline Complaint asserts various causes of action for breach of contract against the GATE Defendants and the Junior Creditor Class Defendants for breaching the Intercreditor Agreement, breach of contract against the GATE Defendants (except GATFIN, which is not a party to the Indenture) for breaching the various covenants they made in the Indenture, and tortious interference with contract against the Controlling Shareholder Defendants for causing GATE to offer the Exchange. The GSO Coastline Plaintiffs also seek an injunction unwinding the improper debt exchange or, in the alternative, specific performance of the governing contracts to subordinate the notes issued to the junior creditors in the Exchange to the notes held by the senior bondholders, an award of monetary damages to compensate them for the harm 3 Defendants have since filed a new set of motions to dismiss the Second Amended Complaint, which are pending before this Court. The Court has schedule a hearing on the motions to dismiss the Second Amended Complaint for April 27, of 45

10 caused by the Exchange, and a declaratory judgment establishing that an event of default has occurred and is continuing under the Indenture. 10. This action is commenced to redress the same harms alleged in the GSO Coastline Complaint. To the extent the allegations of the GSO Coastline Complaint are not repeated in this Complaint, Plaintiffs incorporate by reference the allegations of the GSO Coastline Complaint. In this Complaint, Plaintiff s assert claims for breach of contract against the GATE Defendants and the Junior Creditor Class Defendants for breaching the Intercreditor Agreement, breach of contract against the GATE Defendants (except GATFIN) for breaching the various covenants they made in the Indenture, and intentional interference with contract and unjust enrichment against the Controlling Shareholder Defendants. Plaintiffs also seek an injunction unwinding the improper debt exchange or, in the alternative, specific performance of the governing contracts to subordinate the notes issued to the junior creditors in the Exchange to the notes held by the senior bondholders, or alternatively an award of monetary damages, and a declaratory judgment. PARTIES 11. Plaintiff Marble Ridge Capital LP ( Marble Ridge ) is a limited partnership formed in Delaware, with a principal place of business in New York County, New York. 12. Plaintiff KLS Diversified Asset Management LP ( KLS ) is a limited partnership formed in Delaware. 13. Defendant GATE, on information and belief, is an exempted company with limited liability incorporated under the laws of the Cayman Islands with a registered office in Grand Cayman, Cayman Islands of 45

11 14. Defendant GATFIN, on information and belief, is a Delaware corporation with a registered office in Wilmington, Delaware. 15. Defendant UTAC, on information and belief, is a Singapore corporation with its principal place of business in Singapore. 16. Defendant UTAC Cayman, on information and belief, is an exempted company with limited liability incorporated under the laws of the Cayman Islands with a registered office in Grand Cayman, Cayman Islands. 17. Defendant UTAC Hong Kong, on information and belief, is a Hong Kong corporation with its principal place of business in Hong Kong, China. 18. Defendant UTAC Taiwan, on information and belief, is a company incorporated under the laws of Taiwan, with its principal place of business in Hsinchu, Taiwan ROC. 19. Defendant UTAC Thai, on information and belief, is a company incorporated under the laws of Thailand, with its principal place of business in Bangkok, Thailand. 20. Defendant UTAC Thai Holdings, on information and belief, is a company incorporated under the laws of Thailand, with a registered office in Bangkok, Thailand. 21. Defendant TPG Newbridge, on information and belief, is an exempted company with limited liability incorporated under the laws of the Cayman Islands with a registered office in Grand Cayman, Cayman Islands. 22. Defendant TPG Asia, on information and belief, is an exempted company with limited liability incorporated under the laws of the Cayman Islands with a registered office in Grand Cayman, Cayman Islands of 45

12 23. Defendant Affinity, on information and belief, is an exempted company with limited liability incorporated under the laws of the Cayman Islands with a registered office in Grand Cayman, Cayman Islands. 24. Defendant Costa, on information and belief, is an exempted company with limited liability incorporated under the laws of the Cayman Islands with a registered office in Grand Cayman, Cayman Islands. and 302. JURISDICTION AND VENUE 25. This Court has jurisdiction over this proceeding pursuant to CPLR The GATE Defendants and the Junior Creditor Class Defendants submitted to the jurisdiction of this Court pursuant to Section 9.6(a) of the Intercreditor Agreement, which provides that: Each party hereto [including the GATE Defendants and the Junior Creditor Class Defendants] hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State or Federal court sitting in The City of New York... and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each such party hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State... or, to the extent permitted by law, in such Federal court. Each such party agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the [sic] any First Priority Secured Party or Second Priority Secured Party may otherwise have to bring any action or proceeding against any Loan Party or its properties in the courts of any jurisdiction of 45

13 27. The GATE Defendants (except GATFIN) also submitted to the jurisdiction of this Court pursuant to Section of the Indenture, which provides that: The [GATE Defendants (except GATFIN) agree] that any suit, action or proceeding against the [the GATE Defendants (except GATFIN)] brought by any Holder or the Trustee arising out of or based upon this Indenture, the Notes or the Note Guarantees may be instituted in any state or federal court in the Borough of Manhattan, The City of New York, New York, and any appellate court from any thereof, and irrevocably submits to the exclusive jurisdiction of such courts in any suit, action or proceeding. 28. The Controlling Shareholder Defendants committed a tortious act causing injury in New York and, on information and belief, at all relevant times transacted business in New York. 29. Venue is proper in this Court pursuant to CPLR 501 and CPLR 503(a) and (c) because the parties to the Indenture agreed to venue in the Borough of Manhattan and at least one Plaintiff has a principal place of business in New York County. I. GATE A. GATE s Business and History FACTUAL ALLEGATIONS 30. GATE is a provider of semiconductor assembly and testing services in mixed signal and logic products, analog products, and memory products. Semiconductor integrated circuits manage power for electrical devices, convert radio signals into electronic signals, and store and process data. several parts of China. 31. GATE has production facilities in Singapore, Taiwan, Thailand and 9 13 of 45

14 32. GATE was founded in Singapore in 1997 under the name United Test Center Singapore Pte. Ltd. GATE completed its initial public offering in 2004 under the name United Test and Assembly Center Ltd. 33. Over the years, GATE expanded its operations beyond Singapore through a series of acquisitions and joint ventures. In 2003, it established UTAC Shanghai. In 2005, it acquired Ultra Tera Corp., which became UTAC Taiwan. Also in 2005, it acquired an interest in Semiconductor Manufacturing International (AT) Corporation in Chengdu, China. In 2006, it acquired NSEB, which became UTAC Thai. In 2010, it acquired ASAT Limited, which became UTAC Hong Kong. 34. On or about October 23, 2007, TPG and Affinity acquired control of and took GATE private through a US $1.765 billion leveraged buyout. 35. TPG and Affinity together control GATE. GATE is a wholly-owned, indirect subsidiary of Global A&T Holdings ( GATH ). Jade Electronics Holdings ( Jade, which is controlled by Affinity) owns 47.7% of GATH s outstanding equity. Newbridge Asia Unicorn, L.P. ( Newbridge Unicorn, which is controlled by TPG Newbridge) owns 20.4% of GATH s outstanding equity. TPG Asia Unicorn, L.P. ( TPG Unicorn, which is controlled by TPG Asia) owns 27.3% of GATH s outstanding equity. TPG and Affinity each have two representatives on GATE s four-member board of directors. Jade, Newbridge Unicorn and TPG Unicorn are parties to a shareholders agreement to control GATH. B. GATE s Indebtedness Prior to In connection with TPG and Affinity s 2007 acquisition of GATE, GATE incurred the following debt: US $150 million Senior Revolving Credit Facility; of 45

15 US $625 million Senior Term Loan Facility; US $237.5 million Second-Priority Fixed-Rate Loan Facility; and US $237.5 million Second-Priority Floating-Rate Loan Facility. 1. The Pre-2013 Senior Debt 37. The Company entered into a senior credit agreement with JPMorgan Chase Bank, N.A. ( JPM Chase ) as administrative agent, collateral agent, syndication agent and documentation agent, and J.P. Morgan Securities, Inc. ( JPM Securities ), J.P. Morgan Securities (Asia Pacific) Limited ( JPM Securities Asia ), Merrill Lynch, Pierce, Fenner & Smith Incorporated ( Merrill Lynch ) and ABN AMRO Incorporated ( ABN AMRO ) as the joint lead arrangers and joint bookrunners. 38. The senior credit agreement created two loan facilities: the Senior Revolving Credit Facility and Senior Term Loan Facility (collectively, the Pre-2013 Senior Debt ). 39. The Senior Revolving Credit Facility was used to provide working capital for GATE and to pay other corporate expenses. 40. The Senior Term Loan Facility was used to pay off existing debt and to partially fund TPG and Affinity s acquisition of GATE. 41. The Senior Revolving Credit Facility was due to mature on October 30, The Senior Term Loan Facility was due to mature on October 30, The Junior Debt 43. GATE also entered into second-priority loan agreements to create the Junior Debt. As with the Pre-2013 Senior Debt, JPM Chase was the administrative agent, of 45

16 collateral agent, syndication agent and documentation agent, and JPM Securities, JPM Securities Asia, Merrill Lynch, and ABN AMRO were the joint lead arrangers and book runners. 44. The Second-Priority Fixed-Rate Loan Facility had a coupon of 11.25% and was due to mature on October 30, The Second-Priority Floating-Rate Loan Facility had a coupon of LIBOR plus 6.25% and was due to mature on October 30, Any interest payments owed on the Second-Priority Floating-Rate Loan Facility were added back to the principal of the Second- Priority Floating-Rate Loan Facility for the first four years. 46. The loans under both the $237.5 million Second-Priority Fixed-Rate Loan Facility and the $237.5 million Second-Priority Floating-Rate Loan Facility were automatically converted into term loans due on October 30, Costa, a fund controlled by Affinity, held approximately 36% of the Second-Priority Fixed-Rate Loan and approximately 37% of the Second-Priority Floating-Rate Loan. 3. The Intercreditor Agreement 48. Both the Pre-2013 Senior Debt and the Junior Debt were secured by liens on the Collateral. Accordingly, GATE, GATFIN, UTAC, UTAC Thai and UTAC Taiwan entered into the Intercreditor Agreement with JPM Chase as First Priority Representative for the holders of the Pre-2013 Senior Debt and as Second Priority Representative for the holders of the Junior Debt. 49. The Intercreditor Agreement set forth the priority structure between the Pre-2013 Senior Debt and the Junior Debt with respect to the Collateral. 50. Under the Intercreditor Agreement, the Pre-2013 Senior Debt constituted a First Priority Obligation and the holders of the Pre-2013 Senior Debt were First Priority of 45

17 Parties. The Junior Debt, on the other hand, constituted a Second Priority Obligation and the holders of the Junior Debt were Second Priority Parties. The agreements governing the Junior Debt were defined as Second Priority Agreements. 51. The Intercreditor Agreement expressly stated that the Pre-2013 Senior Debt was senior in priority to the Junior Debt. Specifically, Section 2.1(a) of the Intercreditor Agreement provided in pertinent part: Any and all Liens now existing or hereafter created or arising in favor of any Second Priority Party securing the Second Priority Obligations, regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise are expressly junior in priority, operation and effect to any and all Liens now existing or hereafter created or arising in favor of the First Priority Parties securing the First Priority Obligations Furthermore, the Intercreditor Agreement prohibited changing the priority structure through a refinancing of the Junior Debt. Section 2.2 of the Intercreditor Agreement provided in pertinent part: The lien priorities provided in Section 2.1 shall not be altered or otherwise affected by any... refinancing of either the First Priority Obligations or the Second Priority Obligations, or any portion thereof. (Emphasis added.) 53. The Intercreditor Agreement s definition of a Second Priority Agreement expressly stated that any agreement entered into to refinance the Junior Debt would be considered a Second Priority Agreement: Second Priority Agreement means the collective reference to (a) each Existing Second Priority Agreement [i.e., the agreements governing the Junior Debt], (b) any Additional Second Priority Agreement and (c) any other credit agreement, loan agreement, note agreement, promissory note, indenture, or other financial accommodation that has been incurred to extend, replace, refinance or refund in whole or in part the indebtedness and other obligations outstanding under each Existing of 45

18 Second Priority Agreement [i.e., the agreements governing the Junior Debt], any Additional Second Priority Agreement or any other agreement or instrument referred to in this clause.... (Emphasis added). 54. Moreover, through the Second Priority Representative, the holders of the Junior Debt expressly agreed to not take any action that would disturb the priority structure before GATE s senior creditors were repaid. Section 3.2(a) of the Intercreditor Agreement provided that: [JPM Chase], on behalf of itself and the other Second Priority Secured Parties, agrees that, until the First Priority Obligations Payment Date has occurred... they will not take or cause to be taken any action, the purpose or effect of which is to make any Lien in respect of any Second Priority Obligation pari passu with or senior to, or to give any Second Priority Secured Party any preference or priority relative to, the Liens with respect to the First Priority Obligations or the First Priority Secured Parties with respect to any of the Common Collateral. (Emphasis added.) 55. As of September 30, 2012, GATE had the following outstanding secured debt, which was governed by the Intercreditor Agreement: US $36.5 million on the Senior Revolving Credit Facility; US $577.8 million on the Senior Term Loan Facility; US $231.6 million on the Second-Priority Fixed-Rate Loan Facility; and US $299.1 million on the Second-Priority Floating-Rate Loan Facility. II. The Senior Secured Notes A. The Issuance of the Notes 56. On January 31, 2013, GATE disseminated an offering circular to the bond market (the Offering Circular ) stating that it was offering US $625,000,000 of the 10% Senior Secured Notes due 2019 that would rank senior in priority to the Junior Debt of 45

19 57. According to the Offering Circular, the proceeds from the Senior Secured Notes would be used to pay off the Pre-2013 Senior Debt, which was maturing in 2013 and The Senior Secured Notes are secured by the Collateral, which includes the shares, property, plant and equipment, customer contracts and relationships, accounts receivable and inventory of GATE, UTAC, UTAC Cayman, UTAC Hong Kong, UTAC Thai, UTAC Thai Holdings and UTAC Taiwan. 59. The Senior Secured Notes are also guaranteed by UTAC, UTAC Cayman, UTAC Hong Kong, UTAC Thai and UTAC Thai Holdings as Subsidiary Guarantors. 60. The Senior Secured Notes were issued pursuant to the Indenture. The Trustee and Security Agent under the Indenture is Citicorp International Limited ( Citi or the Trustee ). GATE, UTAC, UTAC Cayman, UTAC Hong Kong and UTAC Taiwan also signed the Indenture. UTAC Thai and UTAC Thai Holdings signed a First Supplemental Indenture dated July 10, 2013 (the First Supplemental Indenture ), ratifying the Indenture after having received local regulatory approval to act as guarantors for the Senior Secured Notes. 61. Concurrently with the offering of the Senior Secured Notes, GATE entered into a new senior revolving credit facility agreement dated January 31, 2013, with JPM Chase (as administrative agent, syndication agent and documentation agent), Citi (as security agent), Bank of America, N.A., Credit Suisse AG, JPM Chase and UBS AG (as joint mandated lead arrangers and joint bookrunners), and certain lenders, to obtain a US $125 million line of revolving credit (the New Senior Revolving Credit Facility ). The New Senior Revolving Credit Facility, like the Senior Secured Notes and the Junior Debt, was secured by the Collateral of 45

20 62. GATE, UTAC, UTAC Cayman, UTAC Hong Kong, UTAC Thai, UTAC Thai Holdings, UTAC Taiwan, JPM Chase and Citi entered into an agreement dated February 7, 2013, setting out the priority structure between the New Senior Revolving Credit Facility and the Senior Secured Notes. Under that agreement, the New Senior Revolving Credit Facility and the Senior Secured Notes ranked pari passu with each other, except upon a continuing event of default under the agreement governing the New Senior Revolving Credit Facility or the bankruptcy of any of the GATE Defendants (except GATFIN), in which case the New Senior Revolving Credit Facility would be paid ahead of the Senior Secured Notes. 63. On February 7, 2013, GATE, UTAC, UTAC Cayman, UTAC Hong Kong, UTAC Thai, UTAC Thai Holdings, UTAC Taiwan, Citi and JPM Chase signed an amendment to the Intercreditor Agreement (the First Amendment to the Intercreditor Agreement ). The First Amendment to the Intercreditor Agreement provided that the Senior Secured Notes and the New Revolving Credit Facility were replacing the Pre-2013 Senior Debt as the First Priority Obligations under the Intercreditor Agreement. Moreover, Citi replaced JPM Chase as the First Priority Representative. The Junior Debt remained a Second Priority Obligation and JPM Chase remained Second Priority Representative under the Intercreditor Agreement. 64. No other material changes were made to the Intercreditor Agreement. The effect of the amendment was to give the holders of the Senior Secured Notes all of the contractual senior, first-priority rights enjoyed by the holders of the Pre-2013 Senior Debt under the Intercreditor Agreement, including their sacrosanct priority over the Second Priority Obligations; i.e., the Junior Debt that GATE purported to unilaterally make pari passu to the First Lien Obligations in the Exchange of 45

21 B. Contractual Prohibitions on Changes to the Priority Structure 65. Both the Indenture and the Intercreditor Agreement contain provisions establishing the subordination of the Junior Debt to the Senior Secured Notes, and precluding the GATE Defendants and the Junior Creditor Class Defendants from taking any action to disturb that priority structure without the consent of the holders of the Senior Secured Notes. Collateral: Indenture, and includes: 66. First, Section 4.12 limits GATE s ability to place new liens on the The Issuer will not, and will not permit any of its Subsidiary Guarantors to, directly or indirectly create, Incur, assume or suffer to exist any Lien securing Indebtedness or Attributable Debt (other than Permitted Liens) (i) on the Collateral The definition of Permitted Liens is contained in Section 1.01 of the Liens securing Permitted Refinancing Indebtedness Incurred to refinance Indebtedness that was previously so secured, provided that any such Lien is limited to all or part of the same property or assets (plus assets or property affixed or appurtenant thereto or proceeds in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien, and provided, further that such Liens remain subject to any priority arrangements and intercreditor agreements governing the Liens securing the Indebtedness being refinanced. (Emphasis added). 68. Thus, the Indenture prohibits the GATE Defendants from securing a refinancing of the Junior Debt with a lien on the Collateral that is not subordinated to a lien on the Collateral securing the Senior Secured Notes. 69. Second, Section 4.18(b) prevents the GATE Defendants from materially impairing the Senior Secured Notes security interest in the Collateral: of 45

22 Subject to clause (c) of this Section 4.18, the Issuer will not, and will not permit any Restricted Subsidiary to, take, or knowingly or negligently omit to take, any action, which action or omission might or would have the result of materially impairing the security interest with respect to the Collateral (it being understood, subject to the proviso below, that the Incurrence of Permitted Liens relating to the Collateral securing the Notes shall under no circumstances be deemed to materially impair the security interest with respect to the Collateral) for the benefit of the Holders of Notes, and the Issuer will not, and will not permit any Restricted Subsidiary to, grant to any Person other than the Trustee or the Security Agent, for the benefit of the Holders of Notes, the Trustee, the Security Agent and the other beneficiaries described in the First Priority Security Documents, any interest whatsoever in any of the Collateral, except as permitted in the First Priority Security Documents; provided, however, that in each case the Issuer or any Restricted Subsidiary may Incur Permitted Liens and the Collateral may be discharged and released in accordance with this Indenture. (Emphasis added). 70. Thus, Section 4.18 of the Indenture prohibits the GATE Defendants from granting the holders of Junior Debt any new interest in the Collateral unless such interest is permitted under the Indenture or the governing security documents (including the Intercreditor Agreement). 71. Third, Section 4.16 of the Indenture precludes the GATE Defendants from amending the Intercreditor Agreement in a way that disturbs the priority scheme established by the terms of the Indenture and the Intercreditor Agreement without the consent of a majority of the holders of Senior Secured Notes: (a) At the discretion of the Issuer and without the consent of the Holders of the Notes, at the time of, or prior to, the Incurrence by the Issuer or any Subsidiary Guarantor of any Indebtedness permitted pursuant Section 4.09 hereof (including by way of a Guarantee of Indebtedness of the Issuer) where such Indebtedness shall be Senior Indebtedness entitled to be secured under the terms of this Indenture, the Issuer, the relevant Subsidiary Guarantors, of 45

23 the Trustee and the Security Agent shall enter into an additional intercreditor agreement (an Additional Intercreditor Agreement ) or shall execute an amendment to the existing Intercreditor Agreement, in each case as permitted under this Indenture and the Intercreditor Agreement, subject to the Trustee receiving an Officer s Certificate and an Opinion of Counsel, with the holders of such Indebtedness (or their duly authorized representatives), and other parties to the Intercreditor Agreement (in case of an amendment to the Intercreditor Agreement), on substantially the same terms as the Intercreditor Agreement, including with respect to the limitations on enforcement, priority and release of security interests (or terms more favorable to Holders of the Notes). (b) At the written direction of the Issuer and without the consent of the Holders of the Notes, the Trustee shall from time to time, and subject to receipt of an Officer s Certificate and an Opinion of Counsel, enter into one or more amendments to any intercreditor agreement to: (i) cure any ambiguity, omission, defect or inconsistency in any intercreditor agreement, (ii) increase the amount of Indebtedness or the types of Indebtedness covered by any of the intercreditor agreements that may be Incurred by the Issuer or a Subsidiary Guarantor and secured, in each case, in compliance with this Indenture and that is subject to any of the intercreditor agreements, (iii) add Subsidiary Guarantors to any of the intercreditor agreements, (iv) further secure the Notes, (v) make provision for the security securing additional Notes to rank pari passu with the security securing the Notes on the Collateral, or (vi) make any other such change to any of the intercreditor agreements that does not adversely affect the rights of the Holders of the Notes in any material respect ((where applicable) in the case of USG, subject to compliance with all the requirements of Section 76 of the Companies Act, Chapter 50, of Singapore). The Trustee shall be entitled to rely on such Officer s Certificate and the Opinion of Counsel without any liability. (c) The Issuer shall not otherwise direct the Trustee to enter into any amendment to any intercreditor agreement without the consent of the Holders of the majority in aggregate principal amount of the Notes then outstanding, except as otherwise permitted by Article IX hereof and the Issuer of 45

24 may only direct the Trustee to enter into any amendment to the extent such amendment does not impose any personal obligations on the Trustee or adversely affect the rights, duties, liabilities or immunities of the Trustee under this Indenture or such relevant intercreditor agreement. (Emphasis added). 72. A refinancing of the Junior Debt that does not retain the existing priority structure between the Senior Secured Notes and the Junior Debt will not fall under the ambit of subsection (a) of Section Amending the Intercreditor Agreement to allow for a refinancing of Junior Debt into Senior Secured Notes would violate the Intercreditor Agreement s core requirement that any debt issued to extend, replace, refinance or refund an existing Second Priority Obligation is itself a Second Priority Obligation, and would thus be the antithesis of issuing debt on substantially the same terms as the Intercreditor Agreement. Similarly, such a refinancing would not qualify under Section 4.16(b) because it would adversely affect the rights of holders of the Senior Secured Notes. Nor would such a change merely be curing any ambiguity, omission, defect or inconsistency, or otherwise qualify for any of the other enumerated prongs of subsection (b). Thus, an amendment to the Intercreditor Agreement to permit a refinancing of the Junior Debt that changed the priority structure between the Senior Secured Notes and the Junior Debt can only be achieved with the consent of the holders of a majority of the Senior Secured Notes under Section 4.l6(c). 73. Fourth, Section 2.2 of the Intercreditor Agreement prohibits the GATE Defendants from changing the subordination of the Junior Debt to the Senior Secured Notes: The lien priorities provided in Section 2.1 shall not be altered or otherwise affected by any... refinancing of either the First Priority Obligations or the Second Priority Obligations, or any portion thereof. 74. Section 2.1 of the Intercreditor Agreement provides that any liens in favor of the Junior Debt are second-priority liens, and that any liens in favor of Senior Secured Notes of 45

25 are first-priority liens. Section 2.2 requires that those lien priorities be maintained in connection with a refinancing of the Junior Debt. Under the definition of Second Priority Agreement, any debt used to replace or refinance the Junior Debt can only be secured by second priority liens. 75. Finally, Section 3.2(a) of the Intercreditor Agreement prevents the holders of Junior Debt from disturbing the priority structure between the Senior Secured Notes and the Junior Debt: [JPM Chase], on behalf of itself and the other Second Priority Secured Parties, agrees that, until the First Priority Obligations Payment Date has occurred... they will not take or cause to be taken any action, the purpose or effect of which is to make any Lien in respect of any Second Priority Obligation pari passu with or senior to, or to give any Second Priority Secured Party any preference or priority relative to, the Liens with respect to the First Priority Obligations or the First Priority Secured Parties with respect to any of the Common Collateral. (Emphasis added). 76. The holders of the Junior Debt are Second Priority Secured Parties and the Junior Debt is a Second Priority Obligation, while the holders of the Senior Secured Notes are First Priority Secured Parties and the Senior Secured Notes are First Priority Obligations. Section 3.2(a) of the Intercreditor Agreement thus assures that the holders of the Junior Debt will not participate in a refinancing (including an exchange) of their debt that has the purpose and effect of the Junior Debt becoming pari passu with the Senior Secured Notes. 77. The Intercreditor Agreement contains a supremacy clause stating that the Intercreditor Agreement controls if there is a conflict between the Indenture and the Intercreditor Agreement. Specifically, Section 9.1 of the Intercreditor Agreement provides that [i]n the event of any conflict between the provisions of this Agreement and the provisions of any First Priority Document [i.e., the Indenture]..., the provisions of this Agreement shall govern. Thus, no of 45

26 action can be taken under the Indenture that violates the priority scheme established by the Intercreditor Agreement. III. The Improper Exchange A. GATE s Declining Operating Performance 78. Following the issuance of the Senior Secured Notes in February 2013, GATE experienced a downturn in business. 79. According to Bloomberg, GATE s sales decreased from US $478 million for the first half 2012 to US $394 million for the first half of 2013, a year-over-year drop of 18%. 80. GATE told the holders of its Junior Debt on September 30, 2013, that it expected sales for the third quarter to further decline and to be worse than the third quarter of GATE attributed its declining revenues as of September 30, 2013, to four factors: (1) the continued weakening of market conditions in the third quarter of 2013 ; (2) the product line rationalization exercise [GATE] commenced in the second half of 2012, which included the phasing out of certain low margin products from [GATE s] Singapore facility ; (3) weakness in [GATE s] memory segment due to the change in strategy of one of [GATE s] key customers ; and (4) slightly higher erosion of [GATE s] aggregate average selling prices than [was] typical in the third quarter of 2013 compared to the same period in After providing this information, GATE issued the following warning about projections it had provided in the past to lenders: The guidance provided above [about GATE s likely third quarter results], and our interim unaudited financial statements for the quarters ended March 31, 2013 and June 30, 2013,... differ materially from projections that have previously been made available to certain holders of our indebtedness, which we believe will be materially inconsistent with and not indicative of any future results of 45

27 of operations or financial condition. No reliance should be placed on such projections in connection with any investment decision relating to us or any of our securities. (Emphasis added). 83. GATE thus signaled to the holders of Junior Debt that its previous financial projections were no longer accurate in light of its recent decline in performance. B. The Terms of the Improper Exchange 84. Faced with the impairment of their holdings due to GATE s deteriorating financial performance based on the loss of a key customer, a weakening market and increasing price erosion, the Junior Creditor Class Defendants sought to circumvent the credit structure that required them to absorb the first losses upon GATE s inability to repay its debt. 85. A substantial portion of the Junior Debt was owned by Costa, which was controlled by Affinity, one of GATE s controlling shareholders. 86. Affinity and TPG caused GATE to offer to exchange the Junior Debt for Additional Senior Secured Notes. 87. GATE announced the terms of the Exchange on September 30, GATE offered US $502,257,000 of Additional Senior Secured Notes under the Indenture to the holders of the Junior Debt. 89. The Additional Senior Secured Notes would have the same yield and maturity as the Senior Secured Notes, and would rank pari passu with the Senior Secured Notes. The Additional Senior Secured Notes were secured by a first-priority lien on the Collateral. 90. The holders of the Junior Debt were not required to contribute any new capital to GATE. Rather, for every US $1,000 of Junior Debt surrendered, a holder of Junior Debt would receive US $925 of Additional Senior Secured Notes of 45

28 91. Rather than requiring the holders of the Junior Debt to pay for the improved position they were offered, GATE improperly paid those holders tens of millions of dollars in the form of a consent fee and an issuance fee. 92. The consent fee was equal to 2% of the principal amount of the holder s outstanding Junior Debt, which totaled US $10.9 million. According to a September 30 Offering Memorandum: In the event that the Required Lenders Condition is satisfied and the Exchange Offer is completed, the Issuer will make a cash payment ( Consent Fee ) to each Exchanging Lender, which Consent Fee shall be 2% of the principal amount of each such Exchanging Lender s Exchanged Loans. 93. The issuance fee was equal to 3.25% of the principal amount of the holder s Additional Senior Secured Notes, which totaled US $16.3 million. According to the September 30 Offering Memorandum: In the event that the Exchange Offer is completed, the Issuer will make a cash payment to each Exchanging Lender of an amount equivalent to 3.25% of the principal amount of the additional notes issued to such Exchanging Lender ( Issuance Fee ). 94. The $27.2 million in fees paid out by GATE to its Junior Debt holders constituted 12% of its ending consolidated cash balance for the first half of The Exchange took place in September After the Exchange was completed, GATE had increased the amount of its total Senior Secured Notes from US $625 million to over US $1.1 billion, and raised the credit cushion supporting the Senior Secured Notes. The Exchange raised the Senior Secured Notes debt-to-ebitda ratio from 3.0x to 5.4x of 45

29 C. GATE s Purported Amendment of the Agreements 96. TPG and Affinity sought to effectuate the Exchange by causing GATE to purportedly amend the Intercreditor Agreement and to issue a supplemental indenture. However, GATE neither sought nor obtained the consent of the holders of the Senior Secured Notes. 97. GATE purported to amend the Intercreditor Agreement, pursuant to Section 9.3(b) of the Intercreditor Agreement, through a second intercreditor amendment agreement dated September 30, 2013 (the Purported Second Amendment to the Intercreditor Agreement ) that designated the Additional Senior Secured Notes as First Priority Obligations under the Intercreditor Agreement and, remarkably, purported to change the definition of Second Priority Agreement to simply exclude any credit agreement that expressly provides that it is not intended to be and is not a Second Priority Agreement hereunder. (Emphasis added). 98. Further, in the Purported Amendment to the Intercreditor Agreement, GATE added the following language: The First Priority Indenture and any notes issued thereunder (including, for the avoidance of doubt, the Additional Notes) are hereby designated as First Priority Agreements and not Second Priority Obligations for the purposes of the Intercreditor Agreement. (Emphasis added). 99. Thus, even though under the existing definition of Second Priority Agreement the Additional Senior Secured Notes were Second Priority Obligations, not First Priority Obligations, GATE attempted to unilaterally convert the Additional Senior Secured Notes into First Priority Obligations through the Purported Amendment to the Intercreditor Agreement, thereby eviscerating the core protection given to the Senior Secured Notes under that Agreement of 45

30 100. GATE purported to issue the Additional Senior Secured Notes through a second supplemental indenture dated September 30, 2013 (the Purported Second Supplemental Indenture ) that added the Additional Senior Secured Notes on the same terms as the Senior Secured Notes. D. The Contractual Violations 101. Through the Exchange, the GATE Defendants violated the Indenture and the Intercreditor Agreement, and the Junior Creditor Class Defendants violated the Intercreditor Agreement. Moreover, through their control of GATE and Costa, the Controlling Shareholder Defendants intentionally and tortiously interfered with the Indenture and the Intercreditor Agreement The Exchange violated Section 4.12 of the Indenture because the firstpriority lien purporting to secure the Additional Senior Secured Notes did not constitute a Permitted Lien. The lien securing the additional notes was not a Permitted Lien because it did not remain subordinated to the lien securing the Senior Secured Notes The Exchange violated Section 4.18 of the Indenture because it materially impaired the Senior Secured Notes security interest in the collateral by removing the subordination provided by the Junior Debt and replacing it with Additional Senior Secured Notes purportedly secured by a first-priority lien in violation of the Intercreditor Agreement and the Indenture The Exchange violated Section 4.16(c) of the Indenture because it was effectuated without the consent of the holders of a majority in aggregate principal amount of the Senior Secured Notes then outstanding, and was not permitted under Section 4.16(a), Section 4.16(b) or Article IX of the Indenture because the Exchange disturbed the priority scheme of 45