Exhibit 2.1
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement"), dated November 25, 1997,
is by and among Raytheon Company, a Delaware corporation ("Raytheon"),
Thornwood Trust, a Massachusetts Business Trust and wholly owned unit of
Raytheon ("Seller"), and Xxxxxxxxx Semiconductor Corporation, a Delaware
corporation ("Buyer").
WHEREAS, Raytheon Semiconductor, Inc., a Delaware corporation and wholly
owned subsidiary of Seller (the "Company"), designs, manufactures and sells
silicon semiconductor devices; and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, 100% of the outstanding shares of common stock of the Company
(the "Shares"), upon the terms and subject to the conditions set forth herein
(the sale and purchase of stock of the Company, the "Stock Purchase");
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
Article I.
Certain Definitions
As used herein, unless the context otherwise requires, the following
terms (or any variant in the form thereof) have the following respective
meanings. Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa, and the reference to any gender shall be
deemed to include all genders. Unless otherwise defined or the context
otherwise clearly requires, terms for which meanings are provided herein
shall have such meanings when used in the Schedules hereto and each
collateral document and certificate executed or required to be executed
pursuant hereto or thereto or otherwise delivered, from time to time,
pursuant hereto or thereto.
"Action" means any litigation or legal or other action, arbitration,
counterclaim, investigation, proceeding, request for material information by
or pursuant to the order of any Governmental Authority, or suit at law or in
arbitration, equity or admiralty commenced by any Person.
"Adverse"or "Adversely" when used in conjunction with "Affect," "Change"
or "Effect" shall mean, with respect to the Company or Buyer, whichever is
the obligor in the context to which such term applies, any related events,
conditions or circumstances which individually or in the aggregate could
reasonably be expected to (a) adversely affect the enforceability of this
Agreement by the obligee or (b) adversely affect the assets, liabilities,
properties, financial condition or results of operation of the Company or
Buyer, whichever is the obligor in the
context to which such term applies or (c) impair the obligor's ability to
fulfill its obligations under the terms of this Agreement or (d) adversely
affect the aggregate rights and remedies of the obligee under this Agreement;
and, with respect to clauses (a)-(d), unless otherwise specifically set forth,
in a material respect or manner or to a material degree. "Materiality" as used
in this definition, unless specifically stated to the contrary, shall be
determined (i) without regard to the fact that various provisions of this
Agreement set forth specific dollar amounts or the basis for calculating such
amounts.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with, such Person, with
"control" for such purpose meaning the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
"Assets" means, other than Excluded Assets, (i) all of the tangible
personal property owned by Raytheon and located within the premises of the
Mountain View Facility or the San Diego Facility and (ii) all of the other
assets, property and rights owned by Raytheon and employed for the purpose of
conducting the Semiconductor Division Business, whether characterized as
tangible or intangible, real, personal or mixed, fixed, contingent or otherwise,
wherever such may be located, in both cases consisting of:
(a) real property interests (including leases), land, plants, buildings,
improvements and accessories set forth on Schedule I hereto;
(b) machinery, equipment, vehicles, furniture and fixtures, leasehold
improvements, supplies, repair parts, tools, plant, laboratory and office
equipment and other tangible personal property, together with any rights or
claims arising out of the breach of any express or implied warranty by the
manufacturers or sellers of any of such assets or any component part thereof;
(c) inventories, including raw materials, work-in-process and finished
goods ;
(d) cash, notes, loans and accounts receivable (whether current or not
current), interests as beneficiary under letters of credit, advances and
performance and surety bonds;
(e) financial, accounting and operating data and records, including books,
records, electronic data, notes, sales and sales promotional data, advertising
materials, credit information, cost and pricing information, customer and
supplier lists, reference catalogs, payroll and personnel records and other
similar information;
(f) Company IP;
(g) Contracts;
(h) prepaid expenses, deposits and retentions held by third parties;
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(i) claims, causes of action, choses in action, rights of recovery,
rights of set-off and rights of subrogation to the extent that such items
arise out of the other properties included in the Assets;
(j) Licenses, including the License between Raytheon and the Company
identified in Schedule 3.5(b) and the immunities granted to the Company
pursuant to Section 5.9 hereof; and
(k) good will and going concern value of the Semiconductor Division
other than that attributable to Raytheon or any of its Affiliates (other than
the Company) or Raytheon's ownership, management and control of the
Semiconductor Division Business and other than that attributable to Raytheon
Trademarks and trade names.
"Assumed Liabilities" means, other than Retained Liabilities, any and
all of the debts, losses, liabilities, claims, damages and obligations,
whether due or to become due, whether accrued, contingent or otherwise
incurred by or relating to the Semiconductor Division or the Company on or
prior to the Closing Date in the ordinary course of business, including (i)
those reflected, reserved against or disclosed on the Closing Balance Sheet,
arising out of Contracts not fully performed as of the Closing Date, or
attributable to the receipt, processing and return of products in connection
with customer returns or credits, (ii) those expressly designated an Assumed
Liability on any Schedule hereto, (iii) liabilities arising under the WARN
Act in conjunction with the termination of any Buyer Employees, (iv) the
liabilities expressly assumed by Buyer pursuant to the provisions hereof, (v)
those patent infringement liabilities identified on Schedule 3.5(d) as
Assumed Liabilities and (vi) any liabilities or obligations of Buyer
described in Section 4.2 hereof or for any other professional, financial
advisory or consulting fees and expenses incident to or arising out of the
negotiation, preparation, approval or authorization of this Agreement and the
transactions contemplated hereby, including without limitation, the fees,
expenses and disbursements of Buyer's counsel and accountants.
"Balance Sheet" means the audited balance sheet of the Semiconductor
Division Business as of December 31, 1996, including the notes thereto.
"Buyer Employees" shall have the meaning given in Section 6.1(a) hereof.
"Cash" means cash, time deposits, certificates of deposit and other cash
equivalents, excluding customer deposits and restricted cash.
"Closing" means the consummation of the transactions contemplated by
Section 2.1 hereof.
"Closing Date" means the later of (i) the third business day after
expiration or termination of all waiting periods prescribed under the HSR
Act, and (ii) the date on which the conditions set forth in Articles IX and X
shall be satisfied or duly waived; provided, however, that if Seller and
Buyer mutually agree on a different date, the Closing Date shall be the date
upon which they have mutually agreed.
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"Code" means the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"Company IP" shall have the same meaning as is set forth in the
Intellectual Property Assignment and License Agreement attached hereto as
Exhibit 5.14.
"Company Products" shall mean a silicon semiconductor device or
packaging which was (a) offered for sale by the Semiconductor Division in
connection with the Semiconductor Division Business; (b) in design or
development by the Semiconductor Division Business as of Closing and which
design or development results in first silicon for production within nine
months after the Closing Date; or (c) derived from a semiconductor device or
packaging identified in clause (a) or (b) above.
"Contract" means any written note, bond, mortgage, indenture, lease,
contract, instrument, license, agreement, sales order, purchase order, open
bid or other obligation or commitment and all rights therein.
"Copyrights" means all copyrighted works of any country, whether
registered or unregistered, applications for copyright registrations and
application specific software (e.g., net lists).
"Entity" means any Person other than a natural Person.
"Environmental Laws" means all federal, state, local and foreign Laws
relating to pollution or protection of the environment, including but not
limited to the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. 9601 et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. 6901 et seq., the Federal Water Pollution Control
Act, 33 U.S.C. 1251 et seq., the Clean Air Act, 42 U.S.C. 7401 et seq., and
the Toxic Substances Control Act, 15 U.S.C. 2601 et seq., and all analogous
foreign, state and local Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means (i) all manner of use of Raytheon's and Seller's
name (except as provided in Section 5.7 hereof) and the names of its
Affiliates, (ii) all Raytheon owned Intellectual Property except Company IP
and Raytheon Licensed IP to the extent the Company shall have the right to
use thereof pursuant to the License granted to the Company pursuant to the
Intellectual Property Assignment and License Agreement attached hereto as
Exhibit 5.14 and identified in Schedule 3.5(b), (iii) Cash, rights against
any Person in connection with any Mountain View Environmental Liabilities,
the assets of any of Raytheon's employee benefit plans and the rights
accruing to Raytheon and Seller under this Agreement, (iv) the Mountain View
Easement, (v) all assets, property and rights (such as telephone system
software and other similar assets) used by Raytheon to provide administrative
support and similar services to the Semiconductor Division or the Company
(except for such rights as are granted to the Company pursuant to a
transition services agreement substantially in the form of Exhibit 5.15
hereto), (vi)
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all Contracts fully performed prior to the Closing Date, and (vii) all
assets, property and rights not currently or previously used in connection
with the Semiconductor Division Business; provided, however, that any
property that is referred to in clauses (i) - (vii) above that is reflected
or disclosed on the Closing Balance Sheet shall be classified as an Asset and
not an Excluded Asset.
"Governmental Authorization" mean any approval, concession, consent,
franchise, license, permit, plan, registration or other authorization of any
Governmental Authority.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any federal, state, local or foreign
Entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including any
government authority, agency, department, board, commission, or
instrumentality of the United States, any State of the United States or
political subdivision thereof, and any tribunal or arbitral authority of
competent jurisdiction, and any self-regulatory organization.
"Hazardous Substance" means (a) any substance that is defined as a
"hazardous waste," "hazardous material," "hazardous substance", "toxic
substance" or similar term under any Environmental Law or (b) petroleum.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Intellectual Property" means Patents, Invention Disclosures, Trademarks,
Mask Works, Copyrights and Know-How.
"Invention Disclosures" means unfiled invention disclosures.
"Know-How" means know-how, technology, processes, methods, manufacturing
procedures, trade secrets, technical information, information related to
packaging designs, product designs and products in development, information
related to software source code, documentation therefor, notebooks and drawings,
and information contained in Invention Disclosures and pending applications that
are not Patents.
"knowledge" (including the term "to the knowledge of") means, with respect
to (i) the Company or Seller, the actual knowledge of the president, any vice
president or the chief financial officer of the Company and the Persons named on
Schedule II hereto and (ii) any other Entity, the actual knowledge of the
executive officers of such Entity, in case of either clause (i) or (ii), after
reasonable investigation (other than with respect to environmental matters and
intellectual property matters, as to which no separate investigation beyond
normal inquiry of employees has been made).
"Laws" means statutes, regulations, ordinances, rules and other laws
promulgated by a Governmental Authority.
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"Licenses" means permits, registrations, approvals, franchises or other
authorizations including without limitation authorizations with respect to
patents, patent applications, trademarks, service marks, trade names,
copyrights, computer software programs, technology, trade secrets and
know-how, and means, when used as a verb, the act of granting a License.
"Lien" means an adverse claim, restriction on voting or transfer or
pledge, lien, mortgage, hypothecation, collateral assignment, charge,
encumbrance, easement, covenant, restriction, title defect, encroachment or
security interest of any kind.
"Mask Works" means all mask works of any country, whether registered or
unregistered and applications for mask work registration.
"Mountain View Easement" shall mean that easement on the Mountain View
Facility retained by Raytheon in the deed transferring the Mountain View
Facility from Raytheon to the Company.
"Mountain View Environmental Liabilities" shall have the meaning set
forth in Section 8.1(a) hereof.
"Mountain View Facility" means the land, building and improvements
constituting facilities located at 000 Xxxxx Xxxxxx, Xxxxxxxx Xxxx,
Xxxxxxxxxx as detailed in Schedule I hereto.
"Net Worth" means, with respect to the Company, as at any date at which
the amount thereof shall be determined, the difference between assets and
liabilities, as calculated in accordance with the procedures set forth in
Section 2.4 hereof.
"Orders" means judgments, orders, injunctions, decrees, stipulations or
awards (whether rendered by a court, administrative agency, arbitrator or other
tribunal) and whether imposed or entered by consent.
"Patents" means United States and foreign patents, patent applications,
and industrial design registrations, together with any continuations,
continuations-in-part or divisional applications thereof, and all patents
issuing thereon (including reissues, renewals and reexaminations of the
foregoing).
"Permitted Liens" means any Liens (i) for Taxes attributable to any
taxable period beginning on or prior to the Closing Date and not yet due or
payable or being contested in good faith and for which appropriate reserves
have been established on the Closing Balance Sheet (as defined in Section
2.4(b)), (ii) that are not material and constitute mechanics', carriers',
workers' or like liens incurred in the ordinary course of business, or (iii)
utility easements, encroachments and other imperfections in title that
individually or in the aggregate do not Adversely Affect the use or value of
the property.
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"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency
or instrumentality thereof and, for purposes of this Agreement, the Company.
"Purchase Price" means One Hundred Twenty Million Dollars
($120,000,000), representing the aggregate consideration to be paid by Buyer
pursuant hereto, before giving effect to any adjustments pursuant to Section
2.4 hereof.
"Raytheon Licensed IP" means Intellectual Property owned by Raytheon
which was used by the Company prior to the Closing in connection with the
manufacture of silicon semiconductor devices and Licensed to the Company by
Raytheon pursuant to the License identified in Section 5.14.
"Remediation" means any investigation, clean-up or other response action
in connection with the presence or Release of Hazardous Substances.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing
into the environment.
"Retained Liabilities" means any and all of the debts, losses,
liabilities, claims, damages and obligations, whether due or to become due,
whether accrued, contingent or otherwise, incurred by or relating to the
Semiconductor Division or the Company on or prior to the Closing Date other
than in the ordinary course of business, including:
(i) the Mountain View Environmental Liabilities (as defined in Section
8.1(a) hereof),
(ii) contingent liabilities not disclosed in any Schedule hereto or in
the Target Balance Sheet;
(iii) all liabilities and obligations arising out of, resulting
from or relating to claims, whether founded upon negligence, strict liability
in tort or other similar legal theory, seeking compensation or recovery for
or relating to injury to person or damage to property arising out of the
conduct of the Semiconductor Division Business;
(iv) product warranty claims other than for repair or replacement of
or credit for, or pursuant to other express warranty provided customers with
respect to, products sold by the Semiconductor Division or the Company;
(v) liabilities with respect to Excluded Assets;
(vi) the liabilities expressly retained by Raytheon pursuant to the
provisions hereof or expressly designated as Retained Liabilities on any
other Schedule hereto;
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(vii) any intercompany loans account;
(viii) those patent infringement liabilities identified on Schedule
3.5(d) as Retained Liabilities ;
(ix) any liabilities or obligations relating to "stay on" payments;
and
(x) any liabilities or obligations of Seller or Raytheon described in
Section 3.13 hereof or for any other professional, financial advisory or
consulting fees and expenses incident to or arising out of the negotiation,
preparation, approval or authorization of this Agreement and the transactions
contemplated hereby, including without limitation, the fees, expenses and
disbursements of Raytheon's or the Company's counsel and accountants (including
accountants' fees, expenses and disbursements in connection with the preparation
of the Financial Statements).
"San Diego Facility" means the land, building and improvements constituting
the leased facilities located at 0000 Xxxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx as
detailed in Schedule I hereto.
"Schedule" means any Schedule hereto.
"Semiconductor Division" means the business unit of Raytheon that is the
predecessor to the Company .
"Semiconductor Division Business" means the silicon semiconductor
business and operations engaged in by the Company or the Semiconductor
Division, as the case may be, at any time during the period from January 1,
1995 until the Closing Date.
"Third-Party Claim" means any Action by or before any Governmental
Authority asserted by a Person other than any party hereto or their respective
Affiliates which gives rise to a right of indemnification hereunder.
"Third-Party Licensed IP" means the Intellectual Property which has been
previously licensed to Raytheon by third parties in connection with the design,
development, manufacture or sale of silicon semiconductor devices by the
Semiconductor Division or the Company pursuant to license agreements which are
in force as of the Closing Date and which are to be transferred to the Company
pursuant to Section 3.5(c); provided, however, that Third-Party Licensed IP does
not include commercial off-the-shelf software which is used by Raytheon pursuant
to company-wide agreements.
"Trademarks" means registered and unregistered trademarks, service marks,
trade names, and applications for the foregoing.
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Article II.
Sale of Shares: Closing
Section 2.1. Purchase and Sale. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
of the conditions set forth herein, at the Closing, Buyer will purchase from
Seller and Seller will sell and deliver to Buyer 2,500 Shares owned by Seller
which constitute, and will constitute as of the Closing, one hundred percent
(100%) of the issued and outstanding Shares.
Section 2.2. Closing Documents. At the Closing:
(a) Seller will deliver certificates for the Shares, with appropriate
stock powers attached, properly signed, and shall execute and deliver to Buyer
such instruments of transfer, duly prepared and executed in accordance with
relevant law, as may be necessary to effect the transfer of the Shares to Buyer
or such Person as Buyer may designate to hold such Shares;
(b) Buyer shall pay by wire transfer the Purchase Price in immediately
available funds to the account specified by Seller; and
(c) Seller and Buyer shall deliver the certificates and other documents
required to be delivered under Articles IX and X hereof (together, with the
other documents specified in Sections 2.2(a) and 2.2(b) hereof, the "Closing
Documents").
Section 2.3. Time and Place of Closing. The Closing shall take place on the
Closing Date at 10:00 A.M., Boston time, at the offices of Xxxxxxxx & Worcester
LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, or such other place or
time as the parties may agree.
Section 2.4. Purchase Price Adjustment. (a) Included as Schedule 2.4(i)
hereto under the heading "Target" is an unaudited balance sheet of the
Semiconductor Division Business at August 31, 1997 (the "Target Balance Sheet"),
together with a statement of the accounting policies and methodologies on the
basis of which the Target Balance Sheet was prepared (the "Accounting
Policies"). The Target Balance Sheet is a balance sheet prepared by Raytheon on
a basis consistent with the principles used to prepare the Balance Sheet, except
as the Accounting Policies otherwise disclose.
(b) Within 60 days following the Closing, Raytheon shall prepare a
balance sheet of the Company as of the Closing Date (including the notes
thereto, the "Closing Balance Sheet"). The Closing Balance Sheet shall fairly
present the financial position of the Company and shall be prepared using the
same accounting methods, policies, practices and procedures with consistent
classifications, judgments, and valuation and estimation methodologies as
used in the calculation of such items on the Target Balance Sheet except that
reserves shall not be reduced for reasons other than in respect of cash
payments since the date of the Target Balance Sheet provided, however, that
as the result of the Company's disposal of approximately $2,000,000 gross
book value of obsolete inventory between September 1, 1997 and the date
hereof, the Company shall
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be permitted to reduce reserves specifically identified to such obsolete
inventory by an amount not to exceed $2,000,000, but such reduction shall not
be permitted unless the inventory reserves remaining on the Closing Balance
Sheet shall include any additional reserves required because of additions to
inventory subsequent to August 31, 1997. During the preparation of the
Closing Balance Sheet and the period of any dispute within the contemplation
of this Section 2.4, Buyer shall (i) provide Raytheon and Raytheon's
authorized representatives with access as reasonably necessary to the books,
records, facilities and employees of the Company, (ii) provide Raytheon
within ten (10) business days after the Closing Date with normal month-end
closing financial information for the period ending on the Closing Date and
(iii) cooperate fully with Raytheon and Raytheon's authorized
representatives, including the provision on a timely basis of all information
necessary or useful in preparing the Closing Balance Sheet. The Target
Balance Sheet does not, and the Closing Balance Sheet will not, include any
accrual for liabilities under any "stay on" plans.
(c) Raytheon shall deliver a copy of the Closing Balance Sheet to Buyer
promptly after it has been prepared. After receipt of the Closing Balance
Sheet, Buyer shall have forty (40) days to review the Closing Balance Sheet,
together with the work papers used in the preparation thereof. Buyer and its
authorized representatives shall have full access to all relevant books and
records and employees of Raytheon to the extent required to complete their
review of the Closing Balance Sheet. Buyer may dispute only those items
reflected on the Closing Balance Sheet which relate to Net Worth and only on
the basis that such amounts were not arrived at in accordance with the
application of the Accounting Policies or financial reporting consistent with
those applied to the Target Balance Sheet, and using substantially the same
accounting methods, policies, practices and procedures with consistent
classifications, judgments, and valuation and estimation methodologies as
used in the calculation of such items on the Target Balance Sheet. Unless
Buyer delivers written notice to Raytheon on or prior to the 40th day after
Buyer's receipt of the Closing Balance Sheet specifying in reasonable detail
all disputed items and the basis therefor, Buyer shall be deemed to have
accepted and agreed to the Closing Balance Sheet. If Buyer so notifies
Raytheon of its objection to the Closing Balance Sheet, Buyer and Raytheon
shall, within forty-five (45) days following such notice (the "Resolution
Period"), attempt to resolve their differences and any resolution by them as
to any disputed amounts shall be final, binding and conclusive.
(d) All amounts remaining in dispute shall be submitted to a firm of
nationally recognized independent public accountants (the "Neutral Auditor")
selected by Raytheon and Buyer within ten (10) days after the expiration of
the Resolution Period. If Raytheon and Buyer are unable to agree on the
Neutral Auditor, then Buyer and Raytheon shall each have the right to request
the American Arbitration Association to appoint the Neutral Auditor, which
shall not have had a material relationship with Raytheon or Buyer within the
past two years. Each party agrees to execute, if requested by the Neutral
Auditor, a reasonable engagement letter. All fees and expenses relating to
the work, if any, to be performed by the Neutral Auditor shall be borne
equally by Raytheon and Buyer. Using the Accounting Policies, the Neutral
Auditor shall act as an arbitrator to determine, based solely on
presentations by Raytheon and Buyer, and not by independent review, only
those issues still in dispute. In no event may the Neutral Auditor
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consider any issues, amounts or matters not disputed within the forty-five-day
period provided in Section 2.4(c) hereof. The Neutral Auditor's determination
shall be made within thirty (30) days of their selection, shall be set forth in
a written statement delivered to Raytheon and Buyer and shall be final, binding
and conclusive. The term "Adjusted Closing Balance Sheet", as hereinafter used,
shall mean the definitive Closing Balance Sheet agreed to by Buyer and Raytheon
in accordance with Section 2.4(c) or the definitive Closing Balance Sheet
resulting from the determinations made by the Neutral Auditor in accordance with
this Section 2.4(d) (in addition to those items theretofore agreed to by
Raytheon and Buyer).
(e) The Purchase Price shall be (a) increased dollar for dollar to the
extent Net Worth reflected in the Adjusted Closing Balance Sheet exceeds, or
(b) decreased dollar for dollar to the extent Net Worth reflected in the
Adjusted Closing Balance Sheet is less than the Net Worth of the Company
reflected in the Target Balance Sheet. Any adjustments to the Purchase Price
made pursuant to this Section 2.4(e) shall be paid by wire transfer in
immediately available funds to the account specified by the party to whom
such payment is owed within five business days after the Adjusted Closing
Balance Sheet is agreed to by Buyer and Raytheon or any remaining disputed
items are ultimately determined by the Neutral Auditor.
Section 2.5. Intercompany Account; Distributions. Immediately prior to
the Closing, Seller will cause the Company to close out the intercompany
loans account and distribute to Seller all Cash.
Section 2.6. Nonassignable Contracts. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any claim, contractual obligation, Governmental Authorization, lease,
commitment, sales, service or purchase order, or any claim, right or benefit
arising thereunder or resulting therefrom, if the Stock Purchase or the
transfer of the Assets to the Company would be deemed an attempted assignment
thereof without the required consent of a third party thereto and would
constitute a breach thereof or in any way affect the rights of Raytheon,
Seller, Buyer or the Company thereunder. If such consent is not obtained, or
if the transfer of the Assets to the Company or consummation of the Stock
Purchase would affect the rights of the Company thereunder so that Buyer
would not in fact receive the benefit of all such rights, Raytheon shall
cooperate with Buyer in any arrangement designed to provide for the benefits
thereof to the Company, including subcontracting, sublicensing or subleasing
to the Company or enforcement for the benefit of Buyer of any and all rights
of the Company against a third party thereto arising out of the breach or
cancellation by such third party or otherwise; and any assumption by Buyer or
the Company of obligations thereunder whether by operation of Law in
connection with the Stock Purchase or in connection with the transfer of the
Assets to the Company which shall require the consent or approval of any
third party shall be made subject to such consent or approval being obtained.
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Article III.
Representations and Warranties of Raytheon and Seller
Raytheon and Seller hereby jointly and severally represent and warrant to
Buyer as follows:
Section 3.1. Incorporation; Authorization; Capitalization; Etc. (a)
Seller is a Massachusetts business trust in good standing under the laws of
the Commonwealth of Massachusetts. Raytheon is a corporation in good
standing under the laws of the State of Delaware. Each of Raytheon, Seller
and the Company is duly organized and validly existing in the jurisdiction of
its organization or incorporation and is in good standing and qualified (with
all requisite power and authority) to transact business in each jurisdiction
in which the nature of property owned or leased by it in the conduct of the
Semiconductor Division Business requires it to be so qualified, except where
the failure to be in good standing or to be duly qualified to transact
business, would not, individually or in the aggregate, reasonably be expected
to have an Adverse Effect on the Company.
(b) Seller has all requisite power and authority to own the Shares, to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. Raytheon has all requisite corporate authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The Company has and, prior to the formation of the
Company, Raytheon had all requisite power and authority to own the Assets and
to carry on the Semiconductor Division Business as it is now being conducted.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate proceedings on the part of Raytheon and Seller. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not (i) violate any provision of
Raytheon's, Seller's or the Company's certificate of incorporation,
declaration of trust or bylaws, as the case may be, (ii) except as disclosed
in Schedule 3.1(b) hereto, violate or conflict with any provision of, or be
an event that is (or with the passage of time will result in) a violation of
or conflict with, or result in the acceleration of or entitle any Person to
accelerate or cancel (whether after the giving of notice or lapse of time or
both) any obligation under, or result in the imposition of any Lien upon any
of the Shares or any of the Assets, pursuant to any Contract or Order to
which Raytheon, Seller or the Company is a party or by which any of them is
bound or (iii) except as listed on Schedule 3.1(b), violate or conflict with
any other material restriction of any kind or character to which Raytheon,
Seller or the Company is subject, that, in the case of clauses (ii) or (iii),
would, individually or in the aggregate, reasonably be expected to Adversely
Affect the Company. This Agreement has been duly executed and delivered by
Raytheon and Seller and, assuming the due execution hereof by Buyer, this
Agreement constitutes the legal, valid and binding obligation of Raytheon and
Seller, enforceable against each in accordance with its terms.
(c) At the Closing, Seller will deliver to Buyer good title to the
Shares free and clear of all Liens, including preemptive rights.
12
(d) The authorized capital stock of the Company consists of 2,500
Shares, all of which are validly issued, outstanding, fully paid and
nonassessable and owned by Seller. There are no outstanding options,
warrants or other rights of any kind relating to the sale, issuance or voting
of any shares of capital stock of any class of, or other equity interests in,
the Company which have been issued, granted, or entered into by Seller.
Section 3.2. Financial Statements. Attached hereto as Schedule 3.2 are
true and complete copies of the following: (i) an unaudited balance sheet of
the Semiconductor Division, as of December 31, 1995 and the related unaudited
statements of income and cash flows, including the notes thereto, (ii) the
Balance Sheet and the related audited statements of income and cash flow and
(iii) an income statement of the Semiconductor Division showing the results
of operations of the Semiconductor Division for the period January 1, 1997
through September 30, 1997 (collectively, the "Financial Statements").
Except as set forth in Schedule 3.2 (subject, in the case of interim
financial statements, to normal recurring, year-end adjustments and the
absence of notes) as of the respective dates thereof the Financial Statements
fairly present in all material respects the financial position and results of
operations of the Semiconductor Division in accordance with the Accounting
Policies in the case of clauses (i) and (iii) and in accordance with United
States generally accepted accounting principles in the case of clause (ii).
Section 3.3. Undisclosed Liabilities. Except for the Assumed
Liabilities, the Company has no liabilities or obligations that would
reasonably be expected to have an Adverse Effect on the Company.
Section 3.4. Properties; Sufficiency of Assets. (a) With the exception
of properties disposed of in the ordinary course of business since the date
of the Target Balance Sheet, the Company has (or will have prior to the
Closing Date) good title to, or holds (or will hold) by valid and existing
lease or License, all real and tangible personal property constituting
Assets, free and clear of all Liens except, in the case of real property
only, Permitted Liens.
(b) Except for (i) the Excluded Assets, (ii) assets disposed of by
Raytheon prior to the date of the Target Balance Sheet, (iii) assets disposed
of in the ordinary course of business since the date of the Target Balance
Sheet and (iv) Intellectual Property constituting Assets, the Assets
constitute or will constitute as of the Closing Date all of the assets used
for the purpose of conducting the Semiconductor Division Business. The
Company has not conducted and does not conduct any operations other than with
respect to the Semiconductor Division Business.
(c) The Assets do not include any ownership interest in a corporation
or partnership (or other entity treated as a corporation or partnership for
U.S. income tax purposes) or in any debt or equity security of any other
person or entity.
(d) The Assets have been or are currently in use in connection with the
Semiconductor Division Business.
Section 3.5. Intellectual Property.
13
(a) Schedule 3.5(a) hereto contains a complete and correct list (subject
to Section 3.5(f)), as of the date hereof, of all Patents, registrations of
Trademarks, registrations of Copyrights and registrations of Mask Works and
applications for any of the foregoing owned by the Company, which in each
case are included among the Company IP, specifying as to each item, as
applicable, (i) the jurisdiction in which the item is issued or registered,
including the respective issuance or registration number and (ii) the filing
date and, in the case of issued patents, the expiration date. All such
Patents, registrations of Copyrights and registrations of Mask Works included
in Schedule 3.5(a) hereto are in full force, all maintenance fees thereon due
prior to thirty (30) days after the Closing Date have been paid or will be
paid by the Closing Date, and to Raytheon's, Seller's or the Company's
knowledge, as of the date hereof, are not subject to any cancellation or
reexamination proceeding or any other actual or threatened proceeding
challenging their scope or validity.
(b) Schedule 3.5(b) hereto contains a complete and correct list as of
the date hereof (subject to Section 3.5(g)), of all Patents, registrations of
Copyrights and registrations of Mask Works and applications for any of the
foregoing, which are Licensed by Raytheon to the Company, specifying as to
each item, as applicable, (i) the jurisdiction in which the item is issued or
registered, including the respective issuance or registration number and (ii)
the filing date and, in the case of issued patents, the expiration date.
(c) Schedule 3.5(c) contains a complete and correct list as of the date
hereof (subject to Section 3.5(h)), of all Licenses to Third-Party Licensed
IP, exclusive of software Licenses used in the ordinary course of business,
which Licenses are, subject to the consent of the respective licensor, to be
transferred to the Company prior to Closing.
(d) Except as otherwise disclosed on Schedule 3.5(d) hereto, (i) the
Company is the owner of all right, title and interest in, and has the right
to bring actions for the infringement of all Company IP free and clear of all
Liens, and (ii) to Raytheon's, Seller's or the Company's knowledge, no notice
of actual, potential or alleged infringement has been received by them as of
the date hereof, nor to their knowledge do any actual, potential or alleged
claims of infringement of the Intellectual Property rights of any third
parties exist based upon the current or past use by the Company of the
Company IP, Raytheon Licensed IP or the Third-Party Licensed IP, in each case
in connection with the Semiconductor Division Business. None of the Company,
Seller, or Raytheon has made any current claim that a third party has
violated or infringed any of the Company IP, or with respect to the
operations of the Semiconductor Division Business, the Raytheon Licensed IP.
(e) Except for commercial, off-the-shelf software which is used by
Raytheon pursuant to company wide license agreements and company wide support
Intellectual Property, and except as set forth in Section 5.7, there is no
other Intellectual Property which either is owned by Raytheon and used by the
Semiconductor Division Business in the manufacture, design and development of
silicon semiconductor devices, or which is licensed to Raytheon in connection
with the manufacture, design and development of silicon semiconductor devices
other than Company IP, Raytheon Licensed IP and Third Party Licensed IP,
provided that Buyer acknowledges the
14
possibility that certain Intellectual Property may have been omitted from
Schedules 3.5(a)-(c), which omissions will be remedied in accordance with
Sections 3.5(f)-(h).
(f) To the extent that there is any Intellectual Property owned by
Raytheon which prior to the Closing Date was used exclusively by the
Semiconductor Division in the conduct of its business for the manufacture,
design, development and sale of silicon semiconductor devices which was
omitted from the Intellectual Property assigned to the Company pursuant to
the Intellectual Property Assignment and License Agreement described in
Section 5.14, and Raytheon becomes aware of that omission within two years
from the Closing Date, or Buyer or the Company brings that Intellectual
Property to the attention of Raytheon within two years from the Closing Date,
Raytheon will assign such Intellectual Property to the Company.
(g) To the extent that prior to the Closing Date there was any
Intellectual Property (other than Trademarks) owned by Raytheon which prior
to the Closing Date was used by the Semiconductor Division in the conduct of
its business for the manufacture, design, development and sale of silicon
semiconductor devices which was omitted from the license agreement between
Raytheon and Company identified in Section 5.14, and Raytheon becomes aware
of that omission within two years from the Closing Date, or Buyer or the
Company brings such Intellectual Property to the attention of Raytheon within
two years from the Closing Date, Raytheon will add such Intellectual Property
to the Raytheon Licensed IP and license it to the Company in accordance with
the terms of the License identified in Section 5.14 that then apply.
(h) To the extent that prior to Closing there is any license under
Third Party Licensed IP which was omitted from Schedule 3.5(c) and Raytheon
becomes aware of that omission within two years from the Closing Date, or
Buyer or the Company brings such license to the attention of Raytheon within
two years from the Closing Date, Raytheon shall, subject to the consent of
the licensor (if required), transfer its rights under such license to the
Company.
Section 3.6. Absence of Certain Changes. Except as disclosed herein or
in the Schedules hereto, the Semiconductor Division Business has been
conducted in all material respects only in the ordinary course and since
December 31, 1996, there has been:
(a) no Adverse Change in the financial condition or results of
operations of the Company except for any change resulting from general
economic, market or industry conditions;
(b) no physical damage, destruction or loss that would reasonably be
expected to have an Adverse Effect on the Company;
(c) no material strike, walkout, labor trouble or any other similar
event with respect to the Semiconductor Business;
(d) with respect to Buyer Employees earning in excess of $100,000 per
year and with respect to Buyer Employees generally no increase in the
salaries or other compensation or benefits payable or to become payable to
such employees and no advance (excluding advances
15
for ordinary business expenses) or loan to, any officer or employee of the
Business except in the ordinary course of business and consistent with past
practice;
(e) no surrender by the Company of any material right and no
cancellation or waiver of any debts or claims of substantial value except in
the ordinary course of business;
(f) except for the transfer of the Semiconductor Division Business to
the Company, no sale, transfer or other disposition of any Assets, except in
the ordinary course of business;
(g) no change of which the Company has been notified in its relations
with any unaffiliated customers accounting for five percent or more of the
Company's annual sales;
(h) no Adverse Change of which the Company has been notified in its
relations with any unaffiliated sole source supplier; and
(i) no material change in the accounting practices of the Company.
Section 3.7. Litigation; Orders. Except as disclosed in Schedule 3.7
hereto, there are no Actions pending, or to Raytheon's or the Company's
knowledge, threatened against it that would, individually or in the
aggregate, reasonably be expected to have an Adverse Effect on the Company.
Except as disclosed in Schedule 3.7 hereto, as of the date hereof, there are
no Orders against the Company or the Assets that would, individually or in
the aggregate, reasonably be expected to have an Adverse Effect on the
Company. Except as disclosed in Schedule 3.7 hereto, to Raytheon's or the
Company's knowledge, there are no events or conditions which would reasonably
be expected to result in an Action against it that would, individually or in
the aggregate, reasonably be expected to have an Adverse Effect on the
Company.
Section 3.8. Licenses, Approvals, Other Authorizations, Consents,
Reports, Etc. Except as disclosed on Schedule 3.8 hereto, the Company has
(or will have prior to the Closing Date) all Licenses relating to the
Semiconductor Division Business (except as relates to Licenses under
Environmental Laws) that are required in order to permit the Company to carry
on the Semiconductor Division Business as it is presently conducted, except
where the failure to have such Licenses would not, individually or in the
aggregate, reasonably be expected to have an Adverse Effect on the Company.
All such Licenses are in full force and effect, and the Company is in
compliance with the terms of such Licenses, except where the failure of such
Licenses to be in full force and effect, or of the Company to be in
compliance with such Licenses would not, individually or in the aggregate,
reasonably be expected to have an Adverse Effect on the Company, provided
that all representations and warranties with respect to Intellectual Property
Licenses are set forth in Section 3.5.
Section 3.9. Labor Matters. To the knowledge of Raytheon and the
Company, as of the date hereof, the relations of Raytheon and the Company
with the Buyer Employees are proper for the conduct of the Semiconductor
Division Business in the ordinary course. Schedule 3.9 hereto sets forth, as
of the date hereof, a list of all agreements with labor unions or
associations
16
representing employees of the Company. No material work stoppage against the
Company is pending or, to Raytheon's or the Company's knowledge, threatened.
The Company is not involved in or, to Raytheon's or the Company's knowledge,
threatened with, any labor dispute, arbitration, lawsuit or administrative
proceeding relating to labor matters involving the Buyer Employees (excluding
routine workers' compensation claims) that would, individually or in the
aggregate, reasonably be expected to have an Adverse Effect on the Company.
Section 3.10. Compliance with Laws. Except as set forth on Schedule
3.10(i) hereto, the conduct of the Semiconductor Division Business by the
Company complies with all Laws and Orders applicable thereto, except for
violations or failures so to comply, if any, that would not reasonably be
expected to have an Adverse Effect on the Company. This Section 3.10 does not
relate to Employee Benefits matters (for which Section 3.11 is applicable),
Tax matters (for which Section 3.16 is applicable) or Environmental matters
(for which Section 3.15 is applicable). Schedule 3.10(ii) hereto and the
Licenses listed on other Schedules hereto list all material Licenses issued
by any Governmental Authority.
Section 3.11. Employee Benefits.
(a) Schedule 3.11(a) lists all employee benefit plans, as defined in
Section 3(3) of ERISA, and all other deferred compensation, bonus or other
incentive compensation, stock purchase, severance pay, salary continuation
for disability or other leave of absence, supplemental unemployment benefits,
layoff or reduction in force, change in control or educational assistance
plans, arrangements or policies including, but not limited to, any individual
benefit arrangement, policy or practice, in which any current or former
Employee of the Company participates or is entitled to benefits on the date
hereof (collectively, the "Benefit Plans").
(b) Raytheon, the Company and, with respect to the Benefit Plans each
other employer (a "Benefits Party") that is, or at any relevant time was,
together with Raytheon or the Company, treated as a "single employer" under
section 414(b), 414(c) or 414(m) of the Code, and each of the Benefit Plans
are in compliance in all material respects with the applicable provisions of
ERISA and those provisions of the Code applicable to the Benefit Plans and
each of the Benefit Plans, has been administered at all times, and in all
material aspects, in accordance with its terms except that in any case in
which any Benefit Plan is currently required to comply with a provision of
ERISA or of the Code, but is not yet required to be amended to reflect such
provision, it has been administered in accordance with such provision.
(c) With respect to any Benefit Plan, there has been no (nor will there
be any as a result of the transactions contemplated by this Agreement) event
or condition which presents a material risk of plan termination or any other
event that may cause the Company or Buyer to incur liability or have a lien
imposed on its assets under the Code, ERISA or any other applicable statute.
17
(d) The Company and each Benefits Party have complied with the notice
and continuation coverage requirements of section 4980B of the Code and the
regulations thereunder with respect to each Benefit Plan that is, or was
during any taxable year of the Company or any Benefits Party for which the
statute of limitations on the assessment of federal income taxes remains
open, by consent or otherwise, a group health plan within the meaning of
section 4980B(g)(2) of the Code.
(e) All of the Benefit Plans which are pension benefit plans have
received determination letters from the Internal Revenue Service ("IRS") to
the effect that such plans are qualified and exempt from federal income taxes
under sections 401(a) and 501(a), respectively, of the Code, as amended
through December 31, 1994; and no determination letter with respect to any
Benefit Plan has been revoked nor has the Company or any Benefits Party
received notice of threatened revocation, nor has any Benefit Plan been
amended since the date of its most recent determination letter in any respect
that would adversely affect its qualification or materially increase its cost
nor has any Benefit Plan been amended in a manner that would require security
to be provided in accordance with section 401(a)(29) of the Code.
(f) Neither the Company nor any Benefits Party has incurred any
material liability to the Pension Benefit Guaranty Corporation ("PBGC") with
respect to any Benefit Plan subject to Title IV of ERISA, other than for the
payment of premiums, all of which have been paid when due. No Benefit Plan
has applied for or received a waiver of the minimum funding standards imposed
by section 412 of the Code.
(g) At no time since December 31 1989, have the Company or any Benefits
Party, been required to contribute to, or incurred any withdrawal liability,
within the meaning of Section 4201 of ERISA to any multiemployer pension
plan, within the meaning of Section 3(37) of ERISA, nor does the Company or
any Benefits Party have any potential withdrawal liability arising from a
transaction described in Section 4204 of ERISA.
(h) Neither the Company nor any Benefits Party has incurred or is
reasonably likely to incur any material liability with respect to any plan or
arrangement that would be included within the definition of "Benefit Plan"
hereunder but for the fact that such plan or arrangement was terminated
before the date of this Agreement.
(i) Except as listed on Schedule 3.11(i) hereto, no payment which is or
may be made by, from or with respect to any Benefit Plan, to any employee,
former employee, director or agent of the Company or any Benefits Party,
either alone or in conjunction with any other payment, will be characterized
as an excess parachute payment under section 280G of the Code.
(j) There are no material pension, welfare, bonus, stock purchase,
stock ownership, stock option, deferred compensation, incentive, severance,
termination or other compensation plans or arrangements, or other material
employee fringe benefit plans presently maintained by, or contributed to by
the Company, or by any Benefits Party for the benefit of any employee of the
Company, maintained outside the jurisdiction of the United States.
18
Section 3.12. Material Contracts. Except as set forth on Schedule 3.12
hereto, the Company is not a party to any (a) employment agreement requiring
payments of base compensation in excess of $100,000 per year or consulting
agreement requiring payments in excess of $5,000 per year, (b) distributor or
manufacturer's representative Contract which is not terminable on three
months' (or less) notice, (c) joint venture or similar Contract or any
Contract containing "non-compete" or similar restrictions on the business
activities of the Company except for foundry agreements, buy-sell agreements
and customer agreements entered into in the ordinary course of business, (d)
Contract that is material to the Semiconductor Division Business that
terminates or is terminable or that requires the consent, authorization,
approval or waiver thereof by the other party thereto upon consummation of
the transactions contemplated by this Agreement, (e) note, mortgage,
indenture, other obligation, agreement or other instrument for or relating to
any lending or borrowing relating to any Asset, (f) Contract for the purchase
by the Company of goods and/or services involving an estimated total future
payment or payments in excess of $25,000, (g) Contract for the sale by the
Company of goods and/or services involving total future payments in excess of
$30,000 (all of which Contracts represent more than ninety percent (90%) of
the backlog of the Semiconductor Division Business as of the stated date) or
(h) other Contract entered into other than in the ordinary course of
business, involving a total future payment in excess of $20,000 and, with
respect to all such Contracts, except as set forth on Schedule 3.12 hereto,
each is in full force and effect and the Company is not, and to Raytheon's
and the Company's knowledge, no other party to any such Contract is in breach
thereof or default thereunder, and there does not exist under any provision
thereof, any event that, with the giving of notice or the lapse of time or
both, would constitute such a breach or default, except for breaches,
defaults and events as to which requisite waivers or consents have been or
are obtained or which failures to be in full force and effect, and breaches,
defaults and events which would not, individually or in the aggregate,
reasonably be expected to have an Adverse Effect on the Company. Except as
set forth on Schedule 3.12 hereof, the Company is not obligated under any
Contract to Raytheon or any of its subsidiaries.
Section 3.13. Brokers, Finders, Etc. Except for the services of
Xxxxxxxxx & Xxxxx (which shall be paid for by Raytheon or Seller), Seller has
not employed, and is not subject to any valid claim of, any broker, finder,
consultant or other intermediary in connection with the transactions
contemplated hereby who might be entitled to a fee or commission in
connection therewith.
Section 3.14. No Implied Representation. Notwithstanding anything
contained in this Article III or any other provision of this Agreement, it is
the explicit intent of each party hereto that Raytheon and Seller are making
no representation or warranty whatsoever, express or implied, beyond those
expressly given in this Agreement, including any implied warranty or
representation as to condition, merchantability, or suitability as to any of
the Assets and it is understood that Buyer takes the Company and the
Semiconductor Division Business without recourse to Raytheon as to claims
based on any inadequacy of condition, impaired merchantability or lack of
suitability. It is understood that any cost estimates, projections or other
19
predictions contained or referred to in the offering materials that have been
provided to Buyer are not and shall not be deemed to be representations or
warranties of Raytheon or Seller.
Section 3.15. Environmental Matters. Except as set forth on Schedule 3.15
hereto:
(a) (i) Raytheon or the Company has or has applied for all Licenses
required under Environmental Laws for the operation of the Company's business
as presently conducted (the "Environmental Permits") and there are no
violations, and no pending, or, to the knowledge of the director of corporate
services of Raytheon, threatened, investigations or proceedings with respect
to such Environmental Permits.
(ii) The Semiconductor Division is, and as of the Closing the Company
will be, in compliance with all applicable Environmental Laws except where
the failure to be in compliance would not, individually or in the aggregate,
reasonably be expected to have an Adverse Effect on the Semiconductor
Division or the Company.
(iii) No written notice, notification, demand, request for information,
citation, summons, complaint or Order has been received by, is pending, or,
to the knowledge of the Company, threatened by any Person against, the
Company in connection with the Semiconductor Division Business nor has any
material penalty been assessed against the Company or the Semiconductor
Division for any alleged violation of any Environmental Law or liability
thereunder, other than where such notice, notification, demand, request for
information, citation, summons, complaint or Order has been fully resolved,
or where the failure to achieve such resolution would not, individually or in
the aggregate, reasonably be expected to have an Adverse Effect on the
Company.
(b) With respect to the Company's (or the Semiconductor Division's)
presently operated facilities other than the Mountain View Facility:
(i) neither the Company nor the Semiconductor Division uses, possesses,
generates, treats, manufactures, processes, handles, stores, recycles,
transports or disposes of (collectively, "Manages") Hazardous Substances
other than such Hazardous Substances as are commonly Managed in connection
with a business office use;
(ii) to the knowledge of the director of corporate services of Raytheon,
no such facility is listed or proposed for listing on any list maintained by
any Governmental Authority of sites requiring Remediation;
(iii) there are no underground or above-ground storage tanks used by
the Company; and
(iv) to the knowledge of the director of corporate services of Raytheon, no
Hazardous Substances have been or are threatened to be Released in, on, under or
from any such facility which require Remediation by the Company or the
Semiconductor Division under applicable
20
Environmental Law, individually or in the aggregate, except for such
Remediation which would not reasonably be expected to have an Adverse Effect
on the Company.
Section 3.16. Tax Matters.
(a) The Company has (i) timely filed all Tax Returns required to be
filed by it, (ii) paid all Taxes shown to have become due pursuant to such
Tax Returns and (iii) paid all other Taxes for which a notice of assessment
or demand for payment has been received. All Tax Returns are true, correct
and complete; have been prepared in accordance with all applicable laws and
requirements; and accurately reflect the taxable income (or other measure of
tax) of the Company. The accruals for Taxes, other than Income Taxes,
contained in the Target Balance Sheet are, and in the case of the Closing
Balance Sheet will be, adequate, to cover all liabilities for Taxes, other
than Income Taxes, of the Company for all periods ending on or before August
31, 1997 and the Closing Date, respectively, and include (or will include in
the case of the Closing Balance Sheet) adequate provision for all deferred
Taxes, other than Income Taxes, in accordance with generally accepted
accounting principles, and nothing has occurred subsequent to such dates to
make any of such accruals inadequate. All Taxes, other than Income Taxes, of
the Company for periods after August 31, 1997 through the Closing Date have
been paid or are adequately reserved against on the books of the Company.
The Company has timely filed all information returns or reports, including
forms 1099, that are required to be filed and has accurately reported all
information required to be included on such returns or reports. True copies
of state income tax returns of the Company, and pro forma copies of the
consolidated federal income tax return that reflects the operations of the
Company, for each of the fiscal years ended December 31, 1992 through
December 31, 1996 have been delivered to Buyer.
(b) Except as disclosed on Schedule 3.16 hereto, there are no proposed
assessments of Taxes against the Company, no proposed adjustments to any Tax
Return pending against the Company and no proposed adjustments to the manner
in which any Tax of the Company is determined. Except as disclosed on
Schedule 3.16 hereto, each Tax Return of the Company has been audited by the
relevant authorities (and all deficiencies or proposed deficiencies resulting
from such audits have been paid or are adequately provided for in the
financial Statements), or the statute of limitations with respect to each Tax
Return has expired, and no Tax Return is under examination by any taxing
authority. No claim has been made by a taxing authority in a jurisdiction
where the Company does not file Tax Returns that the Company is or may be
subject to taxation by that jurisdiction.
(c) Except as disclosed on Schedule 3.16 hereto, the Company has never
(i) executed a waiver or consent extending any statute of limitation for any
Tax liability that remains outstanding, (ii) joined in or been required to
join in filing a consolidated or combined federal, state or local income Tax
Return except the consolidated group of which Raytheon is the parent, (iii)
been the subject of a Tax ruling that will have continuing effect following
the Closing, (iv) been the subject of a closing agreement with any taxing
authority that will have continuing effect following the Closing, or (v)
granted a power of attorney with respect to any Tax matter that has
continuing effect.
21
(d) The Company does not own any interest in any entity characterized
as a partnership for federal income tax purposes.
Section 3.17. Schedules. (a) Any matter described in any Schedule hereto
shall be deemed to be referred to on all other Schedules hereto to which such
matter logically relates if such relationship can reasonably be inferred from
the description of the matter provided in the first such Schedule.
(b) The inclusion of any item on any Schedule to this Agreement shall
not be construed as an indication that such item is material in any respect.
(c) Seller shall not be obligated to revise or update any Schedule
attached hereto.
Article IV.
Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as follows:
Section 4.1. Incorporation; Authorization; Etc. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of
the State of Delaware. Buyer has full corporate power to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement, the performance of Buyer's obligations hereunder and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Buyer and no other corporate
proceedings or actions on the part of Buyer, its Board of Directors or
stockholders are necessary therefor. The execution, delivery and performance
of this Agreement will not (i) violate any provision of the charter or bylaws
or similar organizational instrument of Buyer or any of its Affiliates, (ii)
violate any provision of, or be an event that is (or with the passage of time
will result in) a violation of, or result in the acceleration of or entitle
any party to accelerate (whether after the giving of notice or lapse of time
or both) any obligation under, or result in the imposition of any lien upon
or the creation of a security interest in any of Buyer's or any of its
Affiliates' assets or properties pursuant to, any Contract or Order to which
Buyer or any of its Affiliates is a party or by which Buyer or any of its
Affiliates is bound, or (iii) violate or conflict with any other material
restriction of any kind or character to which Buyer or any of its Affiliates
is subject, that, in the case of clauses (ii) and (iii), would, individually
or in the aggregate, reasonably be expected to have an Adverse Effect on
Buyer or Buyer and its subsidiaries, taken as a whole. This Agreement has
been duly executed and delivered by Buyer, and, assuming the due execution
hereof by Seller, this Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Section 4.2. Brokers, Finders, Etc. Except for the services of CS First
Boston (which shall be paid for by Buyer), Buyer has not employed, and is not
subject to the valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated
22
by this Agreement who might be entitled to a fee or commission from Seller in
connection therewith.
Section 4.3. Licenses, Approvals, Other Authorizations, Consents,
Reports, Etc. Other than the HSR Act, no filing with, notice to or
authorization, consent or approval of, any Governmental Authority is required
to be made, filed, given or obtained by Buyer or any of its Affiliates, in
connection with the consummation of the Stock Purchase except for (i) those
that become applicable solely as a result of the specific regulatory status
of Seller, or (ii) the failure to make, file, give or obtain which would not,
individually or in the aggregate, reasonably be expected to have an Adverse
Effect on Buyer or Buyer and its subsidiaries, taken as a whole.
Section 4.4. Acquisition of the Shares and Operation of Company Business
for Investment. Buyer has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
purchase of the Shares and operation of the Company's business. Buyer
confirms that Seller has made available to Buyer the opportunity to ask
questions of the officers of the Company and to acquire additional
information about the business and financial condition of the Company.
Article V.
Covenants of Raytheon, Seller and Buyer
Section 5.1. Investigation of Business; Access to Properties, Records
and Employees. (a) Raytheon and Seller shall afford to representatives of
Buyer reasonable access to the offices, plants, properties, personnel, books
and records of the Company during normal business hours, in order that Buyer
may have full opportunity to make such investigations (including, without
limitation, environmental assessments or studies) as it desires of the
affairs of the Company; provided, however, that such investigation shall not
unreasonably disrupt the personnel and operations of Raytheon or the Company.
If, in the course of any investigation pursuant to this Section 5.1 between
the execution of this Agreement and the Closing Date, Buyer discovers any
breach of any representation or warranty contained in this Agreement that
would constitute grounds upon which Buyer could refuse to close the
transactions contemplated hereby or any circumstance or condition that, to
the knowledge of the chief financial officer or general counsel of Buyer,
would upon Closing constitute such a breach, Buyer covenants that it will
promptly so inform Raytheon and may not rely on any such breach not disclosed
as grounds for refusing to close the transactions contemplated hereby,
provided that no failure by Buyer to disclose any such breach to Raytheon
shall be used by Raytheon as a defense to Raytheon's duty to indemnify for
any such breach under Section 11.2 hereof. Raytheon and Seller acknowledge
that their representations and warranties in this Agreement shall not
otherwise be affected or mitigated by any investigation conducted by Buyer or
its representatives prior to Closing, or by any knowledge of Buyer.
(b) Any information provided to Buyer or its representatives pursuant
to this Agreement shall be held by Buyer and its representatives in
accordance with, and shall be subject
23
to the terms of, the Confidentiality Agreement dated September 24, 1997 by
and between Raytheon and Buyer, which is hereby incorporated in this
Agreement as though fully set forth herein.
(c) Buyer agrees to (i) hold all of the books and records of the
Company existing on the Closing Date and not to destroy or dispose of any
thereof for a period of five (5) years from the Closing Date or such longer
time as may be required by law, and thereafter, if it desires to destroy or
dispose of such books and records, to offer first in writing at least sixty
(60) days prior to such destruction or disposition to surrender them to
Raytheon and (ii) following the Closing Date to afford Raytheon, its
accountants and counsel, during normal business hours, upon reasonable
request, reasonable access to such books, records and other data and to the
employees of the Company to the extent that such access may be requested for
any legitimate purpose, including without limitation responding to
Governmental Authorities, defending or prosecuting litigation, preparing
Income Tax Returns and other tax filings and carrying out Raytheon's and
Seller's responsibilities with respect to Mountain View Environmental
Liabilities, at no cost to Raytheon or Seller (other than for reasonable
out-of-pocket expenses); provided, however, that nothing herein shall limit
any of Raytheon's and Seller's rights of discovery. Buyer shall have the same
rights, and Raytheon and Seller the same obligations, as are set forth above
in this Section 5.1(c), with respect to any books and records of Raytheon or
Seller pertaining to the Semiconductor Division or the Company that are
retained by Raytheon or Seller, with the exception of Returns relating to
Taxes that are not the responsibility of Buyer.
Section 5.2. Best Efforts; Obtaining Consents. (a) Subject to the terms
and conditions herein provided, each of Raytheon, Seller and Buyer agrees to
use its best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable, the transactions contemplated by
this Agreement and to cooperate with each of the others in connection with
the foregoing, including using its best efforts (i) to obtain all necessary
waivers, consents and approvals from other parties to material Contracts,
(ii) subject to subsection (b) below, to obtain all consents, approvals and
authorizations that are required to be obtained under any Law, (iii) subject
to subsection (b) below, to lift or rescind any Order adversely affecting the
ability of the parties hereto to consummate the Stock Purchase, (iv) to
effect all necessary registrations and filings including filings under the
HSR Act and submissions of information requested by Governmental Authorities,
and (v) to fulfill all conditions to this Agreement (it being understood that
such efforts shall not include any requirement of Buyer, Raytheon or Seller
to expend material sums of money or grant any material financial or other
accommodation). Raytheon, Seller and Buyer further covenant and agree, with
respect to a threatened or pending Order or Law that would adversely affect
the ability of the parties hereto to consummate the Stock Purchase, to use
their respective best efforts to prevent the entry, enactment or promulgation
thereof, as the case may be (it being understood that such efforts shall not
include any requirement of Buyer, Raytheon or Seller to expend material sums
of money or grant any material financial or other accommodation).
(b) (i) Each of Raytheon and Seller (together, a "party" for the
purposes of this Section 5.2(b)) and Buyer shall (A) make or cause to be made
the filings required of such party or any of
24
its subsidiaries or Affiliates under the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable and in any event
within two (2) days after the date of this Agreement, (B) comply at the
earliest practicable date with any request under the HSR Act for additional
information, documents, or other materials received by such party or any of
its subsidiaries from the Federal Trade Commission or the Department of
Justice (either, an "HSR Authority") or any other Governmental Authority in
respect of such filings or such transactions, and (c) cooperate with the
other party in connection with any such filing (including, with respect to
the party making a filing, providing copies of all such documents to the
nonfiling party and its advisors prior to filing and, if requested, to accept
all reasonable changes suggested in connection therewith) and in connection
with resolving any investigation or other inquiry of any such agency or other
Governmental Authority under any Antitrust Laws (as defined in Section
5.2(b)(ii) hereof with respect to any such filing or any such transaction.
Each party shall use its best efforts to furnish to each other all
information required for any application or other filing to be made pursuant
to any applicable Law in connection with the Stock Purchase and the other
transactions contemplated by this Agreement. Each party shall promptly
inform the other party of any communication with, and any proposed
understanding, undertaking, or agreement with, any Governmental Authority
regarding any such filings or any such transaction. Neither party shall
independently participate in any formal meeting with any Governmental
Authority in respect of any such filings, investigation or other inquiry
without giving the other party prior notice of the meeting and, to the extent
permitted by such Governmental Authority, the opportunity to attend and/or
participate. The parties hereto will consult and cooperate with one another
in connection with any analyses, appearances, presentations, memoranda,
briefs, arguments, opinions and proposals made or submitted by or on behalf
of any party hereto in connection with proceedings under or relating to the
HSR Act or other Antitrust Laws.
(ii) Each of Raytheon, Seller and Buyer shall use its best efforts to
resolve such objections, if any, as may be asserted by any Governmental
Authority with respect to the transactions contemplated by this Agreement
under the HSR Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended,
the Federal Trade Commission Act, as amended, and any other federal, state or
foreign statutes, rules, regulations, orders, decrees, administrative or
judicial doctrines or other laws that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint
of trade (collectively, "Antitrust Laws"). In connection therewith, if any
administrative or judicial action or proceeding is instituted (or threatened
to be instituted) challenging any transaction contemplated by this Agreement
as violative of any Antitrust Law, each of Raytheon, Seller and Buyer shall
cooperate and use its best efforts vigorously to contest and resist any such
action or proceeding, including any legislative, administrative or judicial
action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents, or restricts
consummation of the Stock Purchase or any other transactions contemplated by
this Agreement, and vigorously to pursue all available avenues of
administrative and judicial appeal and all available legislative action,
unless by mutual agreement Raytheon, Seller and Buyer decide that litigation
is not in their respective best interest. Each of Raytheon, Seller and Buyer
shall use its best efforts to take such action as may be required to cause
the expiration of the notice period under the HSR Act or other Antitrust
25
Laws with respect to such transactions as promptly as possible after the
execution of this Agreement.
(c) Raytheon shall use its best efforts to obtain the transfer to the
Company of the resale rights of the products of New Japan Radio Co. Ltd.
("NJRC") and any other transferable benefits flowing from the existing
relationship between Raytheon and NJRC. For the six months after Closing,
Raytheon agrees to assist Buyer as Raytheon deems practicable if Buyer
attempts to obtain a seat on the board of directors of NJRC. Raytheon shall
also cooperate with Buyer in any effort to enforce and implement the terms of
any agreement or licensing arrangement relating to the Semiconductor Division
Business involving Raytheon, the Company or NJRC. Effective on the Closing
Date, Raytheon will grant Buyer a six month option to purchase the shares of
NJRC now owned by Raytheon at market price.
(d) In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Section 5.2, the
proper officers and/or directors of Raytheon, Seller and Buyer or any of
their Affiliates, including, to the extent applicable, any Entity designated
to hold the Shares, shall take all such necessary action.
Section 5.3. Further Assurances. Raytheon, Seller and Buyer agree that,
from time to time, whether before or after the Closing, each of them will
execute and deliver such further instruments of conveyance and transfer and
take such other action as may be reasonably required or desirable to carry
out the purposes and intent of this Agreement, including (i) allocating
rights and obligations under Contracts and other arrangements, if any,
relating to business of Raytheon and its Affiliates other than the Company,
on the one hand, and relating to the Company on the other, (ii) transferring
assets to the Company or Buyer, and (iii) entering into any service or other
sharing agreements on a mutually acceptable arm's-length basis that may be
necessary to assure a smooth and orderly transition. In case at any time
after the Closing Date, any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall take all such necessary or desirable action.
Section 5.4. Conduct of Business. From the date hereof through the
Closing, except as disclosed on Schedule 5.4 hereto or otherwise provided for
in, or contemplated by, this Agreement, and, except as consented to or
approved by Buyer in writing (which consent shall not be unreasonably
withheld or delayed), Raytheon and Seller covenant and agree that:
(a) Each of Raytheon and Seller shall, and shall cause the Company to,
use reasonable efforts to operate the Semiconductor Division Business in the
ordinary and usual course in all material respects in accordance with past
practices, and neither Raytheon nor any of its Affiliates will enter into any
Contract with the Company except with Buyer's consent;
(b) except in the ordinary course of business or as required by Law,
Contract or the terms of a Benefit Plan existing on the date hereof, the
Company shall not hereafter (and Raytheon and Seller shall not hereafter
cause the Company to) (i) increase the base compensation of, or enter into
any new bonus or incentive agreement or arrangement with, any of the senior
26
management employees employed by the Company; (ii) pay or agree to pay any
pension, retirement allowance or other employee benefit to any Buyer
Employee, whether past or present not otherwise required by Contract or under
any employee benefit plan in effect on the date hereof; (iii) enter into any
express new employment, severance, consulting or other compensation agreement
with any Buyer Employee; or (iv) commit itself to any pension, profit
sharing, deferred compensation, group insurance, severance pay, retirement or
other employee benefit plan, fund or similar arrangement in addition to those
in effect on the date hereof and intended exclusively for Buyer Employees, or
amend or commit itself to amend any of such plans or similar plans intended
for the benefit of Raytheon's employees generally if the effect thereof would
exclusively benefit Buyer Employees, funds or similar arrangements in
existence on the date hereof.
(c) The Company shall not (i) cancel or compromise, except in the
ordinary course of business consistent with past practice, any debts owed to
it, (ii) waive or release any rights of material value, (iii) close any
plants or any other material facilities or (iv) except for purposes of
transferring Cash and liquidating intercompany accounts, declare any dividend
or make any distribution with respect to its stock.
(d) The Company shall not (i) sell, transfer, distribute as a dividend
in kind or otherwise dispose of any material asset (other than inventory in
the ordinary course of business consistent with past practice), (ii) create
or permit to exist any new material security interest, lien or encumbrance on
its assets, or (iii) except in the ordinary course of business, enter into
any joint venture, partnership or other similar arrangement or form any other
new material arrangement for the conduct of its business or (iv) except in
the ordinary course of business, purchase any asset.
(e) On or as soon as reasonably practicable after the Closing, Buyer
shall cause the Company shall obtain and utilize with respect to its
operations a new EPA identification number (and to the extent required, new
State and local identification numbers) for the generation of Hazardous
Substances disposed of on or after the Closing Date.
Section 5.5. Preservation of Business. From the date hereof to the
Closing Date, subject to the terms and conditions of this Agreement, Raytheon
and Seller shall, and shall cause the Company to, use reasonable efforts (i)
to keep available to the Company and Buyer the services of the Buyer
Employees and (ii) to preserve the good will of customers and others having
business relations with the Company.
Section 5.6. Public Announcements. From the date hereof to the Closing
Date, Raytheon and Buyer will consult with each other before issuing, or
permitting any agent or Affiliate to issue, any press releases or otherwise
making or permitting any agent or Affiliate to make, any public statements
with respect to this Agreement and the transactions contemplated hereby, and,
except as may be required by Law or any listing agreement with any securities
exchange, will not issue any such press release or make any such public
statement, unless the text of such statement shall have been agreed upon by
the parties.
27
Section 5.7 Use of Raytheon Name. (a) From and after the Closing,
except for purposes of announcing Buyer's acquisition of the Company or
responding reasonably to inquiries with respect thereto, and except as set
forth in Section 5.7(b) hereto, Buyer and its Affiliates shall not use or
permit the use of the names or marks "Raytheon", "Raytheon Semiconductor",
"RTN", or any Trademark of Raytheon (not constituting Company IP) or any
Affiliate of Raytheon, any name or xxxx incorporating the foregoing, or any
Trademark confusingly similar thereto, nor shall Buyer use or permit the use
of such names and marks in connection with the operation or disposition of
the Company or the proceeds thereof; provided, however, that (i) for a period
of 120 days from the Closing Date, Buyer may make use of promotional and
sales literature and packaging materials in existence at Closing, provided
that such literature and materials are stickered or otherwise marked to
indicate the change of ownership; (ii) for a period of no longer than six
months from the Closing Date, Buyer may use the Raytheon Marks (defined
below) on qualified packaging for semiconductor devices, as long as (A) the
qualified packaging is made from dies existing at Closing which contain one
or more of the Raytheon Marks, (B) the purchase orders and promotional
material associated with the sale of semiconductor devices with such
packaging are clearly marked to show that the devices are manufactured by
Buyer and (C) Buyer uses its best efforts to promptly design and implement
re-qualified packaging which does not contain the Raytheon Marks; and (iii)
nothing in this Section 5.7 shall require the amendment of any Contracts nor
limit, where relevant, any accurate and complete statement of facts
concerning ownership of the Company prior to the Closing in any Action or in
any filing with a Governmental Authority. Immediately prior to Closing,
Raytheon may and, to the extent Raytheon has not previously done so,
immediately after Closing, Buyer shall, cause the Company to change its name.
(b) Notwithstanding anything to the contrary contained in Section
5.7(a) above, from and after the Closing, the Company and Buyer shall have
the non-exclusive, royalty-free right to use the trademarks "Raytheon" and
"RTN" (the "Raytheon Marks") solely on semiconductor devices manufactured by
the Company using Mask Works constituting Assets that incorporate Raytheon
Marks provided that such semiconductor devices shall conform with Raytheon's
quality standards. Buyer will assist Raytheon in maintaining control over
the quality of the semiconductor devices bearing the Raytheon Marks, and will
provide specimens of the semiconductor devices to Raytheon upon request.
Buyer agrees that the semiconductor devices sold by it bearing the Raytheon
Marks shall be of no less than the same quality as semiconductor devices sold
by the Company under the Raytheon Marks at Closing. In addition, Buyer may
use such Raytheon Marks to the extent that they currently exist on
specifications, drawings or similar documents referring to such semiconductor
devices solely for internal use by the Company.
(c) Buyer acknowledges that (i) Raytheon is the owner of all right,
title, and interest in and to the Raytheon Marks, whether alone or in
combination with other words or designs and Buyer shall not use the Raytheon
Marks except as expressly authorized by this Agreement and (ii) after
Closing, it will not and will not permit the Company to (A) take any action
which would interfere with Raytheon's registration and/or use of the Raytheon
Marks throughout the world; (B) take any action which would diminish or
dilute the distinctiveness or validity of the
28
Raytheon Marks; (C) challenge Raytheon's ownership of the Raytheon Marks
and/or registrations therefor; or (D) attempt to register the Raytheon Marks
or any xxxx confusingly similar thereto, alone or in combination with other
words or designs, as a Trademark in its own name anywhere in the world. After
Closing, Buyer shall cause or shall cause the Company to notify Raytheon of,
but neither Buyer nor the Company shall be required to defend the Raytheon
Marks against, infringement claims or Actions, except that Buyer shall
provide reasonable assistance to Raytheon in connection with steps taken by
Raytheon to protect the Raytheon Marks, including, but not limited to signing
any registered user document or other documents required by any Trademark
Office or other Governmental Authority.
(d) After the Closing, Buyer and the Company will assume all risk with
respect to their use of the Raytheon Marks. Buyer shall indemnify Raytheon
and its Affiliates, and their respective employees, officers and directors
and hold them harmless from and against any claims, damages, judgments,
losses and expenses, including reasonable attorney's fees, that arise out of
any claim, threat of litigation or litigation relating to or arising from
Buyer's or the Company's use of the Raytheon Marks as provided hereunder.
Section 5.8. Performance of Company Obligations to Raytheon. Buyer
agrees from and after the Closing Date to perform and fulfill (or cause to be
performed and fulfilled) all Scheduled Contracts, existing as of the Closing
Date, between the Company and Raytheon or any of its Affiliates.
Section 5.9 Non-Infringement. Raytheon agrees that neither itself nor
its Affiliates will, in connection with the Company's conduct of the
Semiconductor Division Business, assert against Buyer, or its Affiliates, any
claims for infringement of (i) any Patent, Copyright, or Mask Work which on
the Closing Date it owns or under which it has a right to grant a License
without obligation or accounting to others, or (ii) any of the foregoing
which may later issue on an application owned by Raytheon and pending on the
Closing Date.
Section 5.10. Buyer's Warranty Obligation. (a) Buyer covenants and
agrees that it will cause the Company to honor fully and perform diligently
all of the Company's product warranty, guaranty and product return
obligations, express or implied, which arise from or are related to products
manufactured or services provided prior to the Closing Date by the
Semiconductor Division or the Company in the ordinary course of business,
including, with respect to products manufactured for or services provided to
Raytheon or any Affiliate of Raytheon (other than the Company), provided that
neither Buyer nor the Company shall have responsibility or liability for any
such obligations constituting Retained Liabilities as set forth in paragraph
(iv) of the definition of Retained Liabilities.
(b) From and after the Closing Date, Buyer and the Company shall
indemnify and hold harmless Raytheon from and against any and all Covered
Liabilities (as defined in Section 11.2 hereof), suffered, incurred by or
asserted, directly or indirectly, against Raytheon by reason or arising out
of the covenants set forth in Section 5.10(a) hereof. Claims for breaches of
29
covenant of Buyer in Section 5.10(a) hereof may be asserted until 60 days
after the running of the applicable statute of limitations.
Section 5.11. Patent Indemnification. (a) Subject to the limitations
set forth in this Section 5.11, for the three (3) year period beginning on
the Closing Date, Raytheon shall indemnify, save and hold harmless Buyer and
the Company, their Affiliates and for each such Entity their respective
officers, directors, employees, agents, distributors and users of Company
Product from and against money damages (including royalties) and/or costs
awarded arising out of any claims by any third party that the design,
development, making, having made, use, offer for sale, import, package or
sale of Company Products by Company infringes any patent issued prior to the
Closing Date in any country in which the allegedly infringing Company Product
had been made, used or sold prior to Closing, including those patent
infringement liabilities identified in Schedule 3.5(d) as Assumed
Liabilities; provided, however, that such indemnification shall not apply to
a Company Product if the infringement of a third party's patent would have
been avoided but for a post-Closing change in manufacturing, design or
packaging of a Company Product, or but for a change in the combination of
products with which a Company Product is sold or offered for sale.
(b) Upon its receipt of a claim giving rise to a claim for indemnity
under this Section 5.11, including receipt by it of any notification,
communication, demand, assertion, claim, action, judicial proceeding,
administrative proceeding, or other proceeding by any third party that Buyer
or the Company infringes or has misappropriated such a third party's patent,
Buyer or the Company will give prompt written notice thereof to Raytheon.
Buyer's or the Company's failure to notify Raytheon promptly of a claim will
relieve Raytheon of its obligations under this Section 5.11 only if the
failure has an Adverse Effect on Raytheon's ability to defend or settle that
claim, and such failure shall only affect Raytheon's obligations with respect
to that claim. Raytheon shall promptly address all claims received from
Buyer or the Company. Raytheon shall act in good faith in evaluating a
settlement of a claim and shall consider the following factors in the
evaluation: (i) the validity of the claim, (ii) the monetary limitations of
the indemnity under this Section 5.11, (iii) the effect of the claim's being
upheld in litigation upon the Company's business, and (iv) the mutual desire
of the parties to minimize the expense of the indemnity.
(c) The indemnity set forth in Section 5.11 shall apply for the
enforceable life of the asserted patent with respect to any claims filed
prior to the expiration of the three year period set forth in Section 5.11(a).
(d) With respect to any claim which Raytheon is called upon to
indemnify Buyer and the Company under the terms of this Section 5.11,
Raytheon shall have the exclusive control of the defense of such suit and all
negotiations relative to the settlement thereof. Buyer and the Company shall
provide all reasonable information and assistance, at Raytheon's sole
expense, as Raytheon may request, including, if commercially reasonable,
redesigning the Company's or Buyer's products to make them non-infringing.
The commercial reasonableness of a redesign of a product includes, without
limitation, the retention of all performance features that materially affect
the marketability of the product, the lack of any material effect on the
Company or Buyer's
30
ability to obtain orders and to obtain and retain customers for the product,
and the avoidance of any material increased manufacturing costs. Raytheon
shall be permitted to settle such claims, upon reasonable prior notice to,
and after consultation with, Buyer and the Company, at its sole expense,
provided neither Buyer nor the Company shall have any obligation for future
expense or payment and provided that the settlement agreement shall not
result in any requirement that Buyer or the Company cease, alter (except for
a redesign provided for by this Section 5.11(d)) or curtail the
manufacturing, importation, marketing or sale of any product. Buyer and the
Company shall have the right, but not the obligation, to participate in such
legal proceedings with counsel of its own selection and its own expense.
Buyer and the Company agree that Raytheon shall be authorized in the
settlement of such claims to grant licenses under Patents that are Company IP
or Raytheon Licensed IP, provided that Buyer and the Company receive from the
licensee of such patents a reciprocal patent license of comparable weight and
scope.
(e) Raytheon's liability under this Section 5.11 (including all third
party costs and out-of-pocket expenses incurred by it exclusive, however, of
any internal Raytheon manhour costs (salaries plus applicable xxxx-ups for
fringes and overhead) for the time its employees spent on the matter) shall
in no event exceed ten million dollars ($10,000,000.00); provided, however,
that if this liability limit will be exceeded by virtue of any proposed
settlement, Raytheon shall not make such a settlement without the prior
written consent of Buyer and the Company provided that Buyer and the Company
shall be responsible for and shall assume all costs in excess of said limit
of liability and provided that Buyer shall not unreasonably withhold its
consent to any proposed settlement.
(f) The indemnity provided in this Section 5.11 shall not apply if the
claimed infringement is the result of the Buyer's breach of any obligation
under any License.
Section 5.12. Absence of Debt. Seller and Raytheon covenant to Buyer
that the Company has no outstanding debt obligations (including without
limitation letters of credit or surety obligations) as of the date hereof and
will have no such debt obligations as of the Closing Date.
Section 5.13. Noncompetition. Raytheon agrees, on behalf of Raytheon
and the Affiliates of Raytheon (excluding independently trusteed benefit
plans, the "Raytheon Group"), that for a period of three (3) years after the
date hereof (the "Restricted Period"), no member of the Raytheon Group will
engage directly or indirectly in competition with the Company, whether
individually or as a consultant, partner, owner or stockholder of an Entity,
in the business of selling silicon semiconductor devices manufactured or sold
by the Semiconductor Division Business or the Company (the "Restricted
Business"). Notwithstanding the foregoing, nothing herein shall prohibit any
member of the Raytheon Group from (a) owning, directly or indirectly, less
than ten percent (10%) of any class of securities listed on a national
securities exchange or traded publicly in the over-the-counter market, (b)
directly or indirectly acquiring a business which engages in the Restricted
Business if such business is twenty percent (20%) or less (measured by net
revenues) of a larger business acquired by a member of the Raytheon Group,
provided that Raytheon shall not make any Raytheon Licensed IP available to
such business, (c)
31
acquiring a business which engages in the Restricted Business if such
business is more than twenty percent (20%) but less than fifty percent (50%)
(measured by net revenues) of a larger business acquired by a member of the
Raytheon Group, provided that (i) such member of the Raytheon Group places
such competitive business for sale promptly after its acquisition and uses
commercially reasonable efforts to complete such sale within the Restricted
Period and (ii) Raytheon shall not make any Raytheon Licensed IP available to
such business, (d) continuing to produce and sell those products now being
produced and sold by members of the Raytheon Group (including within the
foregoing all products that were under development as of the date hereof),
except those silicon semiconductor devices that have substantially similar
specifications to those manufactured by the Company, and (e) continuing any
business acquired in connection with Raytheon's acquisition of the defense
industry businesses of Texas Instruments Incorporated and Xxxxxx Electronics
Corporation.
Section 5.14. License Agreement; Delivery of Files. On the Closing
Date, the Company and Raytheon will enter into an Intellectual Property
Assignment and License Agreement in the form attached hereto as Exhibit 5.14
and Raytheon shall deliver to the Company the file histories for the
Intellectual Property identified in Schedule 3.5(a) which is being
transferred to the Company pursuant to Intellectual Property Assignment and
License Agreement identified in this Section 5.14.
Section 5.15. Transition Services Agreement. On the Closing Date, the
Company and Raytheon will enter into a Transition Services Agreement in the
form attached hereto as Exhibit 5.15.
Section 5.16. Retention Obligations. While the obligations associated
with the "stay-on" arrangements constitute Retained Liabilities, it is
acknowledged by the parties that Buyer will pay any costs associated with
such arrangements and will be reimbursed by Raytheon after such payments have
been made.
Section 5.17. Performance of Seller's Obligations. Raytheon shall
cause Seller to perform Seller's obligations hereunder.
Section 5.18. Survey. Raytheon may cause a survey of the land at the
Mountain View Facility to be conducted, and upon completion and delivery
thereof to Buyer, so much of Raytheon's and Buyer's representation and
warranty in Section 3.4(a) as applies to encroachments with respect to the
Mountain View Facility (other than encroachments that Adversely Affect the
use or value thereof) shall terminate. The cost of the survey will be borne
equally by Raytheon and Buyer.
Section 5.19. Intellectual Property Claims. In the event that any
claim is made against Buyer or Company with respect to any design,
development, making, having made, using, offering for sale, importing,
exporting, or selling of Company Products as a result of the fact that
Raytheon failed to identify in Schedule 3.5(c) any license for Third Party
Licensed IP and that, as a consequence thereof, failed to request the
required consents to transfer such license rights to the
32
Company, then in such case Raytheon shall, subject to the limit of liability
set forth in Section 5.11(e), indemnify, save and hold harmless Buyer and the
Company from and against any money damages (including royalties) and/or costs
awarded arising out of any such claim to the extent that such amounts are in
excess of the license fees and royalties which would have been payable had
the license been identified and transferred. The limit of liability under
Section 5.11(e) is an aggregate limit for claims arising under both Section
5.11 and this Section. Raytheon shall have no liability if it requests and
obtains the required consents with retroactive application and Raytheon shall
have no liability, resulting from a licensor's refusal to grant the consents
when requested to do so.
Article VI.
Employees, Employee Benefits and Other Transitional Matters
Section 6.1. Hiring Employees; Comparable Benefits. (a) Except as
provided hereafter with respect to certain employees to be terminated, Buyer
will cause the Company to continue in employment as of the Closing Date (or,
in the case of employees within clause (iii), as of the date of their return
to active employment) but makes no commitment with respect to any period
following the Closing Date (i) all employees on the Company's active payroll
on the Closing Date, (ii) all persons who are subject to outstanding
employment offers from the Company at Closing and (iii) any Semiconductor
Employee not on the Company's active payroll on the Closing Date on account
of an approved leave of absence or short-term disability leave (but excluding
those employees on long-term disability leave) if such employee returns to
active employment with the Company immediately upon the conclusion of any
such leave of absence or within the period required by Law (all such
employees being "Buyer Employees"). Not less than 10 days before the Closing
Date Raytheon or Seller shall cause the Company to terminate up to 20
individuals (the "Terminated Semiconductor Employees") (whose names Buyer
shall have the option to provide to Seller or Raytheon not less than 15 days
before the Closing Date and which list of names Raytheon and Seller shall
have the right to approve) who but for such termination would be Buyer
Employees as of the Closing Date; provided that Raytheon or Seller shall not
be responsible for the costs of such terminations. Schedule 6.1(a) lists all
Buyer Employees. All employment of Buyer Employees after Closing and for
the 365 day period following the Closing shall be for pay and benefits no
less favorable in the aggregate than the pay and benefits in effect at
Closing. Such employment and the benefits to be provided to the Employees
shall recognize the date of hire and time of service with Raytheon and/or the
Company for vesting and eligibility but not benefit accrual purposes unless
inconsistent with another provision of this Article.
(b) Buyer agrees that, for a period of 60 days after the Closing Date,
it will not cause any of the Buyer Employees to suffer "employment loss" for
purposes of the Worker Adjustment and Retraining Notification Act, 29 U.S.C.
Sections 2101-2109, and related regulations (the "WARN Act") if such
employment loss could create any liability for Raytheon or its Affiliates,
unless Buyer delivers notices under the WARN Act in such a manner and at such
a time that the Seller bears no liability with respect thereto.
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Section 6.2. Medical Benefits and Retirement Plans. Commencing as of
the Closing Date, Buyer shall provide the Buyer Employees and dependents and
beneficiaries thereof (the "Eligible Individuals") medical and dental benefit
coverage as well as the opportunity to participate in Buyer's "401(k)" plan.
Buyer Employees shall be entitled to roll over to Buyer's 401(k) plan
distributions they may receive from any "401(k)" or other profit-sharing plan
maintained by Raytheon or any Affiliate of Raytheon.
Section 6.3. Investment Plans. Raytheon will retain all liability and
responsibility for the disposition of interests under the Raytheon Savings
and Investment Plan (the "RAYSIP Plan") and the Raytheon Stock Ownership Plan
(the "RAYSOP Plan" and, together with the RAYSIP Plan, the "Investment
Plans") with respect to those employees (or their beneficiaries) of the
Company who, as of the Closing Date, are participants in either of the
Investment Plans. No such participant will be eligible to make any
contributions to the RAYSIP Plan, and Raytheon will not be obligated to make
any contribution with respect to any such participant in either Investment
Plan, with respect to compensation earned by such employees on or after the
Closing Date. Raytheon agrees that it will cause the accounts in RAYSIP of
all such participants to be fully vested as of the Closing Date.
Section 6.4. Pension Plans. Raytheon shall retain all liability and
responsibility for any benefit or other liabilities accrued under any defined
benefit pension plan, as defined in Section 3(35) of ERISA, maintained by
Raytheon. Buyer shall have no obligation with respect to any defined benefit
plan, nor any obligation to establish any such plan.
Section 6.5. Incentive Plans. Attached as Schedule 6.5(a) is a
description of Raytheon's incentive plans (the "Incentive Plans") in which
employees of the Company participate. The Company will maintain adequate
accruals on the Closing Balance Sheet for such plans.
Section 6.6. Indemnification.
(a) Raytheon agrees to indemnify Buyer and the Company, and hold them
harmless from and with respect to any and all claims, liabilities, losses,
damages, costs and expenses (including without limitation the reasonable fees
and disbursements of counsel) arising out of the employment, or failure to
employ, any individual by Raytheon or any Affiliate for any period ending on
or before the Closing Date or arising out of any employee benefit plan or
arrangement maintained by Raytheon or any Affiliate.
(b) Buyer agrees to indemnify Raytheon and its Affiliates other than
the Company, and hold them harmless from and with respect to any and all
claims, liabilities, losses, damages, costs and expenses (including without
limitation the reasonable fees and disbursements of counsel) arising out of
the employment, or failure to employ any individual (except for the costs
assumed pursuant to Section 6.1 and excluding any Terminated Semiconductor
Employee), for any period after the Closing Date or arising out of any
employee benefit plan or arrangement maintained by Buyer.
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(c) The indemnities provided for in Sections 6.6(a) and 6.6(b) hereof
shall expire 60 days after the running of the applicable statute of
limitations.
Section 6.7. Access to Books and Records. As soon as practicable
after the Closing Date, Buyer shall receive from Raytheon (i) such pertinent
data or information as Buyer may reasonably require to determine the Buyer
Employees' accrued benefits under the Raytheon Retirement Plans, (ii) such
information concerning each Buyer Employee's period of employment with
Raytheon and/or the Company as Buyer may reasonably require to determine
service for eligibility and benefit accrual purposes, and (iii) such
information concerning the terms of the Benefit Plans and concerning each
Buyer Employee's benefit utilization under welfare benefit plans as Buyer may
reasonably require to comply with this Agreement.
Section 6.8. Exclusive Benefit. This Article VI shall operate
exclusively for the benefit of Buyer and Seller and not for the benefit of
any other Person including, without limitation, any current, former or
retired employee of Buyer or Seller.
Article VII
Tax Matters
Section 7.1. Tax Indemnification by Seller and Raytheon. (a) Seller
and Raytheon shall be liable for, and shall hold Buyer and the Company and
any successor corporations thereto or Affiliates thereof harmless from and
against, the following Taxes with respect to the Company:
(i) any and all Income Taxes for any taxable period ending (or
deemed, pursuant to Section 7.3 hereof, to end) on or before the Closing Date
due or payable by the Company including, without limitation, any and all
Income Taxes resulting from the 338(h)(10) Elections; and
(ii) to the extent not reserved for on the Adjusted Closing Balance
Sheet, any Other Taxes payable with respect to Tax Returns filed or required
to be filed (taking into account extensions), or otherwise properly
accruable, on or before the Closing Date.
(b) Seller and Raytheon shall also be liable for, and shall hold Buyer
and the Company and any successor corporations thereto or Affiliates hereof
harmless from and against, all Taxes with respect to the operations of Seller
or its Affiliates, other than those operations conducted by the Company and
its subsidiaries, including any several liability of the Company under
Treasury Regulations section 1.1502-6 or under any comparable or similar
provision under state, local or foreign laws or regulations, and from and
against any liability for Taxes with respect to any gain realized by Seller
upon the sale of the Company.
Section 7.2. Tax Indemnity by Buyer. Buyer shall be liable for, and
shall hold Seller harmless from and against, the following Taxes with respect
to the Company and its subsidiaries or Affiliates: (i) any and all Income
Taxes for any taxable period beginning after the Closing
35
Date, due or payable by the Company or by Seller, (ii) any and all Other
Taxes (other than Taxes described in Section 7.1 hereof for which Seller is
liable) for all taxable periods (whether beginning before, on or after the
Closing Date), and (iii) any and all Other Taxes not incurred in the ordinary
course of business attributable to the acts or omissions of Buyer, Buyer's
Affiliates or the Company after the Closing on the Closing Date.
Section 7.3. Allocation of Certain Taxes.
(a) Buyer and Seller agree that if the Company is permitted but not
required under applicable state or local Income Tax laws to treat the Closing
Date as the last day of a taxable period, Buyer and Seller shall treat such
day as the last day of a taxable period.
(b) Any Taxes for a taxable period beginning before the Closing Date
and ending after the Closing Date with respect to the Company shall be
apportioned for purposes of Sections 7.1 and 7.2 hereof between Seller and
Buyer based on the actual operations of the Company, as the case may be,
during the portion of such period ending on the Closing Date and the portion
of such period beginning on the date following the Closing Date, and for
purposes of the provisions of Sections 7.1, 7.2, 7.3 and 7.5, each portion of
such period shall be (whether or not it is in fact a taxable period);
provided, however, that real property and personal property taxes shall be
allocated on a per diem basis; provided, further, that to the extent
estimated Income Taxes have been paid prior to the Closing Date with respect
to a taxable period beginning before the Closing Date and ending after the
Closing Date, Seller's liability with respect thereto shall be reduced by
that amount; provided further, that if such payment of estimated Income Taxes
exceeds Seller's liability as calculated pursuant to this Section 7.3., Buyer
shall promptly pay Seller the amount of such excess. Upon timely notice from
Buyer, Seller shall pay to Buyer at least ten (10) days prior to the date any
payment for Income Taxes as described in this Section 7.3 is due, Seller's
share of such Income Taxes as described in this Section 7.3.
Section 7.4. Filing Responsibility.
(a) Seller shall prepare and file or shall cause the Company to prepare
and file all Returns with respect to Income Taxes for periods ending on or
before the Closing Date and all Returns with respect to Other Taxes that are
required to be filed on or before the Closing Date.
(b) Buyer shall prepare and file, or shall cause the Company to prepare
and file, subject in the case of any such Returns for Income Taxes or Returns
for Other Taxes that reflect a tax liability greater than which entered into
the computation of the accrual set forth on the Adjusted Closing Balance
Sheet to Seller's review and approval, all Returns for taxable periods
beginning before the Closing Date and ending after the Closing Date, and all
other Returns for which Seller does not have filing responsibility pursuant
to Section 7.4(a) hereof.
(c) Buyer agrees that it will not, and will not permit the Company to,
except to the extent contrary to Law, take any position in the Returns
referred to in clause (b) above
36
inconsistent with that taken in a Return for which Seller has filing
responsibility pursuant to this Article VII.
Section 7.5. Refunds and Carrybacks.
(a) Seller shall be entitled to any refunds or credits of Income Taxes
attributable to or arising in taxable periods ending on or before the Closing
Date.
(b) Buyer and the Company, as the case may be, shall be entitled to any
refunds or credits of Income Taxes attributable to or arising in taxable
periods beginning on or after the Closing Date.
(c) Seller shall be entitled to any refunds or credits of Other Taxes
for which Seller is liable pursuant to Section 7.1(b) hereof. Buyer and the
Company shall be entitled to any refunds or credits of Other Taxes not
referred to in the preceding sentence attributable to or arising in any
taxable period (whether beginning before or after the Closing Date).
(d) Buyer agrees that if as the result of any audit adjustment made by
any taxing authority with respect to a taxable period ending on or prior to
the Closing Date, Buyer or the Company receives a Tax Benefit, then Buyer
shall pay to Seller the amount of such Tax Benefit (on an after-tax basis)
within 15 days of filing the Return in which such Tax Benefit is realized or
utilized.
(e) Seller agrees that if as the result of any audit adjustment made by
any taxing authority with respect to a taxable period ending on or before the
Closing Date, Buyer, the Company or any of its Affiliates suffers a Tax
Detriment, then Seller shall pay to Buyer the amount of such Tax Detriment
(on an after-tax basis) within 15 days of the filing of the Return in which
such Tax Detriment is realized or incurred.
(f) Buyer shall cause the Company promptly to forward to Seller or to
reimburse Seller for any refunds or credits due Seller (pursuant to the terms
of this Article VII) after receipt thereof, and Seller shall promptly
forward to Buyer (pursuant to the terms of this Article VII) or reimburse
Buyer for any refunds or credits due Buyer after receipt thereof.
(g) Buyer and the Company agree that, with respect to any Income Tax,
the Company shall not carry back any item of loss, deduction or credit which
arises in any taxable period ending after the Closing Date ("Subsequent
Loss") into any taxable period ending on or before the Closing Date. If a
Subsequent Loss with respect to any Income Tax is carried back into any
taxable period ending on or before the Closing Date, Seller shall be entitled
to any refund or credit of Taxes realized as a result thereof.
Section 7.6. Cooperations and Exchange of Information.
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(a) Seller shall prepare and submit to Buyer, no later than three
months after the Closing Date, 1997 and, if applicable, 1998 blank tax return
workpaper packages. Buyer shall, and shall cause the Company to prepare
completely and accurately and submit to Seller within three months of
receipt, all such information as Seller shall reasonably request in such tax
return workpaper packages.
(b) As soon as practicable, but in any event within thirty (30) days
after Seller's request, from and after the Closing Date, Buyer shall provide
Seller with such cooperation and shall deliver to Seller such information and
data concerning the pre-Closing operations of the Company and make available
such knowledgeable employees of the Company and its subsidiaries and
Affiliates as Seller may reasonably request, including providing the
information and data required by Seller's customary tax and accounting
questionnaires, in order to enable Seller to complete and file all Returns
which it may be required to file with respect to the operations and business
of the Company and its subsidiaries and Affiliates through the Closing Date
or to respond to audits by any Taxing Authorities with respect to such
operations and to otherwise enable Seller to satisfy its internal accounting,
tax and other legitimate requirements. Such cooperation and information
shall include provision of powers of attorney for the purpose of signing
Returns and defending audits and promptly forwarding copies of appropriate
notices and forms or other communications received from or sent to any Taxing
Authority which relate to the Company, and providing copies of all relevant
Returns, together with accompanying schedules and related workpapers,
documents relating to rulings or other determinations by any Taxing Authority
and records concerning the ownership and tax basis of property, which Buyer
or the Company may possess. Each of Buyer and the Company shall make its
respective employees and facilities available on a mutually convenient basis
to provide explanation of any documents or information provided hereunder.
(c) For a period of three (3) years after the Closing Date, Buyer
shall, and shall cause the Company to, retain all Returns, books and records
(including computer files) of, or with respect to the activities of, the
Company for all taxable periods ending on or prior to the Closing Date.
Thereafter, Buyer shall not dispose of any such Returns, books or records
unless it first offers such Returns, books and records to Seller and Seller
fails to accept such offer within sixty (60) days of its being made.
Buyer and Seller shall cooperate in the preparation of all Returns
relating in whole or in part to taxable periods ending on or before the
Closing Date that are required to be filed after such date.
(d) Whenever any Taxing Authority asserts a claim, makes an assessment,
or otherwise disputes the amount of Taxes for which Seller is liable, Buyer
shall promptly inform Seller (provided that failure to provide such notice
shall not impair Buyer's rights except to the extent that Seller demonstrates
that it has been damaged thereby), and Seller shall have the right to control
any resulting meetings, conferences or proceedings and to determine whether
and when to settle any such claim, assessment or dispute to the extent such
proceedings or determinations affect the amount of Taxes for which Seller is
liable.
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(e) If Buyer or the Company fails to provide any information requested
by Seller in the time specified herein, or if no time is specified pursuant
to this Section 7.6, within a reasonable period, or otherwise fails to do any
act required of it under this Section 7.6, then Buyer shall be obligated,
notwithstanding any other provision of this Agreement, to indemnify Seller
and Buyer shall so indemnify Seller and hold Seller harmless from and against
any and all costs, claims or damages, including all Taxes or deficiencies
thereof, payable as a result of such failure.
Section 7.7. Purchase Price. Buyer and Seller agree that the
consideration provided for pursuant to this Agreement is being paid solely to
acquire the Shares and neither party will (or will permit any Affiliate to)
report or treat any part of such consideration as allocable to anything other
than payment for the Shares.
Section 7.8. Tax Sharing Agreements. Any Tax Sharing Agreement between
the Company and Raytheon, Seller or any other Person is terminated as of the
Closing Date and shall have no further effect for any taxable year (whether a
current year, a future year or a past year).
Section 7.9. Elections and Forms.
(a) With respect to Seller's sale of the Shares hereunder, Seller and
Buyer shall, at the election of Buyer, jointly make all available Section
338(h)(10) Elections in accordance with applicable Tax Laws and as set forth
herein. Buyer and Seller agree to report the transfers under this Agreement
consistent with the Section 338(h)(10) Elections, and shall take no position
contrary thereto unless required to do so by applicable Tax Laws pursuant to
a Determination.
(b) Buyer shall be responsible for the preparation and filing of all
Section 338 Forms in accordance with applicable Tax Laws and the terms of
this Agreement. Seller shall execute and deliver or shall cause to be
executed or delivered to Buyer such documents or forms as are reasonably
requested and are required by any Tax Laws properly to complete the Section
338 Forms, at least twenty (20) days prior to the date such Section 338 Forms
are required to be filed.
(c) Buyer and Seller agree that they shall use their best efforts to
enter into an agreement (the "Allocation Agreement") prior to the Closing
Date concerning the computation of the Aggregate Deemed Sale Price (as
defined under applicable Treasury Regulations) of the Assets and the
allocation of such Aggregate Deemed Sale Price among the Assets. Such
Allocation Agreement shall be in accordance with Law. Buyer and Seller shall
agree that they shall use their best efforts to revise the Allocation
Agreement to the extent necessary to reflect the differences, if any, between
the Balance Sheet and the Closing Date Balance Sheet no later than sixty (60)
days before the last date on which the Section 338(h)(10) Election may be
filed. If, sixty days before the last date on which the Section 338(h)(10)
Election may be filed, Buyer and Seller have not adopted or revised the
Allocation Agreement as described above, any disputed aspects of the
Allocation Agreement or such revision shall be resolved before the last date
on which the Section 338(h)(10) Election may be filed by a "big six"
accounting firm
39
mutually agreed upon by Buyer and Seller having no material relationship with
either Buyer or Seller. The costs, expenses and fees of such accounting firm
shall be borne equally by Buyer and Seller, Buyer and Seller agree to act in
accordance with the allocations contained in the Allocation Agreement in any
relevant Returns or similar filings.
Section 7.10. Definitions. For purposes of this Agreement, the
following terms shall have the meanings ascribed to them below:
(a) "Determination" means a "determination" as defined by Section
1313(a) of the Code.
(b) "Income Taxes" means federal, state or local income or franchise
taxes or other taxes measured by income and all other taxes reported on
Returns which include federal, state, local or foreign income or franchise
taxes or other taxes measured by income, together with any interest or
penalties imposed with respect thereto.
(c) "Income Tax Returns" means federal, state, local or foreign Income
Tax Returns required to be filed with any U.S. Taxing Authority that include
the Company.
(d) "IRS" means the Internal Revenue Service.
(e) "Other Taxes" means all Taxes which are not Income Taxes.
(f) "Returns" means returns, reports and forms required to be filed
with any Governmental Authority.
(g) "Section 338 Forms" means all returns, documents, statements, and
other forms that are required to be submitted to any federal, state, county,
or other local Taxing Authority in connection with a Section 338(h)(10)
Election. Section 338 Forms shall include any "statement of section 338
election" and United States Internal Revenue Service Form 8023A (together
with any schedules or attachments thereto) that are required pursuant to
Treas. Reg. Section 1.338-1 or Treas. Reg. Section 1.338(h)(10)-1.
(h) "Section 338(h)(10) Election" means an election described in
Section 338(h)(10) of the Code with respect to Seller's sale of the Shares to
Buyer pursuant to this Agreement. Section 338(h)(10) Election shall include
any corresponding election under any other relevant Tax Laws for which a
separate election is permissible with respect to Buyer's acquisition of the
Shares from Seller under this Agreement.
(i) "Tax Benefit" means the tax effect of any item of loss, deduction
or credit or any other item which decreases Taxes paid or payable or
increases tax basis including any interest with respect thereto or interest
that would have been payable but for such item.
40
(j) "Tax Detriment" means the tax effect of any item of income or other
item that increases Taxes paid or payable or decreases tax basis, including
any interest with respect thereto or interest that would have been payable
but for such item.
(k) "Taxes" means all taxes (whether federal, state, local or foreign)
based upon or measured by income and any other tax whatsoever, including, but
not limited to, gross receipts, profits, sales, use, occupation, value added,
ad valorem, transfer, franchise, withholding, payroll, employment, excise or
property taxes, together with any interest or penalties imposed with respect
thereto. (l) "Tax Laws" means the Code, federal, state, county, local
or foreign laws relating to Taxes and any regulations or official
administrative pronouncements released thereunder.
(m) "Taxing Authority" means any Governmental Authority, domestic or
foreign, having jurisdiction over the assessment, determination, collection
or other imposition of Tax.
Article VIII.
Environmental Matters
Section 8.1. Environmental Liabilities.
(a) The parties acknowledge that the Mountain View Facility is listed
on the National Priorities List and has been the subject of Remediation by
Raytheon with oversight by the United States Environmental Protection Agency
("EPA"). Raytheon shall retain all responsibility and liability following
Closing, with such consultants and contractors as it may select in its sole
discretion, for dealing with EPA and undertaking and completing Remediation
of conditions at or originating from the Mountain View Facility which arose
prior to the Closing Date or were created by Releases of Hazardous Substances
that first occurred prior to the Closing Date, to the extent required by
Environmental Law or any Order, taking into consideration the current
industrial use of the Mountain View Facility (the "Mountain View
Environmental Liabilities"). Raytheon shall retain all rights under
insurance policies and all rights to recover from responsible parties with
respect to the Mountain View Environmental Liabilities. Raytheon shall bear
no responsibility for any conditions which may arise on or after the Closing
Date as a result of any Post-Closing Release of Hazardous Substances by Buyer
or any third party (except Raytheon's consultants or contractors or any
Person acting for, on behalf of or at the direction of Raytheon, including,
without limitation, in connection with the performance of the Remediation of
the Mountain View Facility ("Raytheon Parties")), provided that any leaking,
leaching, migration or similar movement of Hazardous Substances which existed
in soil or ground water prior to the Closing Date shall not be considered a
Release by Buyer except to the extent such is exacerbated by activities or
negligent omissions of Buyer or any third party (other than any Raytheon
Parties) on or after the Closing Date.
(b) In connection with such Remediation of the Mountain View
Environmental Liabilities by Raytheon, Raytheon shall conduct all Remediation
required by EPA or any other
41
Governmental Authority with jurisdiction (subject to Raytheon's right to
contest any such requirement by appropriate proceedings), and Buyer shall,
upon prior written notice, provide Raytheon, its consultants and contractors
access to the Mountain View Facility and shall permit them to install,
operate and maintain remedial treatment systems and to conduct all other
Remediation which Raytheon determines to be necessary or appropriate. Buyer
will cause any successor owners of the Facility to afford Raytheon the same
rights to access and to conduct Remediation (which access shall only be to
the extent necessary to conduct the Remediation and shall terminate upon the
completion of the Remediation), and Buyer agrees to record an appropriate
acknowledgment of such rights in the Registry of Deeds upon Raytheon's
request. Raytheon shall use commercially reasonable efforts not to interfere
unreasonably with Buyer's operation of the Company (where reasonableness is
determined by the conduct of a reasonably prudent person responsible for both
the operations of the business and the conduct of the Remediation) and
Raytheon shall indemnify and hold harmless Buyer Indemnified Parties (as
defined in Section 11.2) for any damage to the Mountain View Facility and
against any liability to third persons to the extent such damage or liability
is caused by Raytheon's Remediation; provided, however, as a condition to
such indemnity, that upon the request of Raytheon, the Buyer Indemnified
Party first assigns, subrogates or otherwise effectively transfers to
Raytheon its rights against the Persons causing such damage or liability.
Raytheon agrees to reasonably cooperate with the Buyer's reasonable plans for
the future use of the Mountain View Facility by relocating or modifying
equipment used in connection with the Remediation; provided, however, that
Buyer will be responsible for the cost of such relocation or modification.
(c) In addition to the foregoing, from and after the Closing Date,
Raytheon shall indemnify, defend and hold Buyer Indemnified Parties (as
defined in Section 11.2) harmless from and against any and all Covered
Liabilities asserted against or incurred or suffered by Buyer Indemnified
Parties arising out of or related to: (i) environmental conditions first
occurring, existing or arising prior to the Closing Date arising out of or
resulting from the Release of Hazardous Substances in, on, under, from, or at
the Mountain View Facility and any real property formerly (but not currently)
owned, operated or leased by the Company or any of its predecessors except to
the extent such is exacerbated by activities or negligent omissions of Buyer
or any third party (other than any Raytheon Parties) on or after the Closing
Date or (ii) the off-site transportation, disposal, recycling, treatment or
storage prior to the Closing Date of Hazardous Substances generated by the
Company or Raytheon in connection with the Semiconductor Division Business
prior to the Closing Date.
(d) Notwithstanding the foregoing, nothing contained in this Section
8.1 shall be interpreted to waive any claims which Raytheon may have against
Buyer in the absence of this transaction and Raytheon does not indemnify or
hold harmless Buyer with respect to any Covered Liabilities for which Buyer
would be responsible in the absence of this transaction.
Section 8.2. Indemnities by Buyer. Buyer shall indemnify and hold
harmless Raytheon against all Covered Liabilities asserted against or
incurred or suffered by Raytheon arising out of or relating to the Release
first occurring on or after the Closing Date of any Hazardous Substance in,
on, under or from any portion of a facility owned, operated or leased by the
Company after
42
the Closing Date (except in each case from an off-site source and provided
that any leaking, leaching, migration or similar movement of Hazardous
Substances which existed in soil or ground water prior to the Closing Date
shall not be considered a Release by Buyer except to the extent such is
exacerbated by activities or negligent omissions of Buyer or anyone other
than Raytheon Parties post-Closing on the Company's property); provided,
however, that Buyer may, at its election, control the defense and, if
required, Remediation in connection with any such Covered Liabilities.
Except as set forth in Section 8.1(b), Buyer shall also indemnify and hold
harmless Raytheon against (a) all claims and liabilities caused by any
refusal by Buyer or successor owners to allow Remediation by Raytheon or any
unreasonable interference with the conduct, management or control of
Remediation by Raytheon and (b) all claims and liabilities arising from or
related in any way to the Remediation by Buyer or any third party, including
any Governmental Authority, or additional Remediation required of Raytheon,
in connection with or as a result of any changes to the existing use of the
Mountain View Facility.
Section 8.3. Remediation for Releases after Closing. If any
Remediation required by Environmental Law with respect to Releases of
Hazardous Substances at, on, in or under any portion of the Mountain View
Facility is required in part by Releases before the Closing Date and in part
by Releases first occurring on or after the Closing Date (provided that any
leaking, leaching, migration or similar movement of Hazardous Substances
which existed in soil or ground water prior to the Closing Date shall in no
event be considered a post-Closing Date Release), the costs for such cleanup
or other response shall be divided between Raytheon and Buyer according to
their respective degree of responsibility in connection with such Releases.
To determine Buyer's portion of the costs for such cleanup or other response,
Raytheon shall deliver to Buyer its good faith estimate of the allocation of
responsibility. Within 30 days after Raytheon's delivery of such estimate,
Buyer shall be entitled to provide notice to Raytheon that it is of the view
that Raytheon's allocation of responsibility was not accurate and shall
provide Buyer's good faith estimate of the allocation of responsibility in
reasonable detail. Thereupon, Raytheon and Buyer shall meet to resolve their
differences concerning such allocation. If Raytheon and Buyer cannot agree
within 30 days of the date of such notice, such allocation of fault shall be
promptly resolved by submitting, at either party's request, such dispute to
final and binding arbitration. The Arbitrator shall be a retired Judge from
JAMS/End Dispute ("JAMS") selected by the JAMS office in Boston,
Massachusetts. The arbitration location shall be decided by the parties
jointly, or if no agreement is reached, the arbitration shall be held at a
location selected by JAMS. Each party shall bear its own expenses and will
share equally in the arbitrator's fees and related expenses, provided that
once an arbitration judgment is entered, the prevailing party shall be
entitled to recover attorneys' and or expert fees and related costs. The
arbitrator will determine what discovery, if any, is appropriate. Judgment
on the award rendered by the arbitrator may be entered in a court having
competent jurisdiction. The judgment awarded by the Arbitrator shall be
final, binding and nonappealable.
Section 8.4. OSHA Matters.
(a) Set forth on Schedule 8.4 hereto is a list of certain conditions
and operations observed by Buyer at the Mountain View Facility and separately
with respect to each, the
43
sections under the Occupational Safety and Health Act, as amended ("OSHA"),
and each of the specific regulations adopted pursuant thereto deemed
applicable by Buyer to each such condition or operation. Raytheon has
reviewed Schedule 8.4 and considers that no actions are necessary to conform
such conditions and operations with the requirements of such sections of OSHA
and such regulations as are set forth for each listed item on Schedule 8.4
hereto.
(b) From and after the date hereof and until Raytheon takes such
actions as are required to bring any item listed on Schedule 8.4 hereto into
reasonable conformity (to the extent such item was not already in reasonable
conformity) with the sections of OSHA and regulations thereunder cited on
Schedule 8.4 hereto, or until such item is in reasonable conformity
therewith, Raytheon shall indemnify and hold harmless Buyer and the Company
from and against any and all Covered Liabilities (as defined in Section 11.2
hereof), suffered, incurred by or asserted, directly or indirectly, against
Buyer or the Company by reason or arising out of an item identified on
Schedule 8.4 hereto not in reasonable conformity with OSHA and the
regulations thereunder. Claims for indemnity by Buyer in this Section 8.4
may be asserted until 60 days after the running of the applicable statute of
limitations. The indemnity provided pursuant to this paragraph shall be void
and of no effect unless Buyer grants Raytheon reasonable access to the
Mountain View Facility for purposes of remedying or alleviating any condition
or operation listed on Schedule 8.4. Buyer agrees that when requested by
Raytheon to acknowledge that a condition or operation specified in Schedule
8.4 has been brought into or is in reasonable conformity with the sections of
OSHA and the regulations thereunder specified on Schedule 8.4, it will do so
promptly after reasonable inquiry.
Section 8.5 Wastewater Treatment. Raytheon agrees that, without the
prior consent of Buyer (which consent shall be granted at Buyer's
discretion), it will not accept or treat pollutants, including wastewater or
groundwater, from any property other than the Mountain View Facility except
for pollutants from other properties the treatment of which is (i) within the
existing capacity of the treatment facilities of the Mountain View Facility
and footprint, and (ii) which are either (A) currently being transported for
treatment to the Mountain View Facility via existing pipeline, or (B)
contemplated to be transported for treatment to the Mountain View Facility
from the properties located at 365 and 000 Xxxx Xxxxxxxxxxx Xxxx along a
pipeline routing proposed by Raytheon, provided, however, that, Raytheon
shall indemnify and hold harmless Buyer Indemnified Parties for Covered
Liabilities suffered, incurred by or asserted, directly or indirectly,
against Buyer Indemnified Parties by reason or arising out of such acceptance
or treatment of wastewater and groundwater from such other properties; and
with respect to clause (ii)(B), within 90 days of the date hereof, Buyer may
propose routing the pipeline in a manner convenient to it (subject to a
maximum cost of $450,000), and Raytheon will construct at its expense the
pipeline in accordance with such routing.
44
Article IX.
Conditions of Buyer's Obligation to Close
Buyer's obligation to consummate the Stock Purchase shall be subject to
the satisfaction on or prior to the Closing Date of all of the following
conditions:
Section 9.1. Representations, Warranties and Covenants of Seller. (a)
The representations and warranties of Raytheon and Seller contained in this
Agreement (which for purposes of this paragraph shall be read as though none
of them contain any Adverse Affect, Change or Effect or other materiality
qualifier individually or in the aggregate) shall be true and correct on and
as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of such date (except for
representations and warranties that speak as of a specific date or time,
which need only be true and correct as of such date or time), except where
the failure of the representations and warranties in the aggregate to be true
and correct in all respects would not have an Adverse Effect on the Company.
(b) Raytheon and Seller shall have performed in all material respects
each obligation and agreement and shall have complied in all material
respects with each covenant to be performed and complied with by them
hereunder at or prior to the Closing (other than Seller's covenants pursuant
to Section 2.2 (a) and (b) hereof with respect to delivery of documents of
transfer of the Shares at the Closing, which shall be performed in all
respects).
(c) Buyer shall receive at or prior to the Closing a certificate as to
the matters set forth in paragraphs (a) and (b) of this Section 9.1, dated
the Closing Date, and validly executed by the President of the Company.
(d) The Company shall have obtained or there shall be reasonably
available to Buyer or the Company title insurance respecting the Mountain
View Facility insuring the Company as the owner of record of the Mountain
View Facility subject only to Permitted Liens.
Section 9.2. Filings; Consents; Waiting Periods. All waiting periods
applicable under the HSR Act shall have expired or been terminated, and all
registrations, filings, applications, notices, consents, approvals (including
consents and approvals set forth on Schedule 3.12 hereto pursuant to Section
3.12(d) hereof which are designated as Closing consents), Orders,
qualifications and waivers required to be obtained or made as of the Closing
Date in order to consummate the transactions contemplated hereby and to
transfer the Licenses and Contracts contemplated hereby shall have been
filed, made or obtained, except for such registrations, filings, notices,
consents, approvals, Orders, qualifications and waivers the lack of which
would not reasonably be expected to have an Adverse Effect on the Company.
Section 9.3. No Injunction. At the Closing Date, there shall be no Order
of any nature of any Governmental Authority of competent jurisdiction that is
in effect that restrains or prohibits
45
the consummation of all or any portion of the Stock Purchase, and no Law
shall have been enacted by any Governmental Authority which prevents
consummation of the Stock Purchase.
Section 9.4. Seller's Financial Statements. Buyer shall have received
from Seller the audited balance sheet of the Semiconductor Division Business
as of December 31, 1995 and the audited 1994 and 1995 statements of income
and cash flows.
Article X.
Conditions to Seller's Obligation to Close
Seller's obligation to consummate the Stock Purchase is subject to the
satisfaction on or prior to the Closing Date of all of the following
conditions:
Section 10.1. Representations, Warranties and Covenants of Buyer. (a)
The representations and warranties of Buyer contained in this Agreement
(which for purposes of this paragraph shall be read as though none of them
contain any Adverse Affect, Change or Effect or other materiality qualifier
individually or in the aggregate) shall be true and correct on and as of the
Closing Date with the same effect as though such representations and
warranties had been made on and as of such date (except for representations
and warranties that speak as of a specific date or time, which need only be
true and correct as of such date or time), except where the failure of the
representations and warranties in the aggregate to be true and correct in all
respects would not have an Adverse Effect on Buyer or Buyer and its
subsidiaries, taken as a whole.
(b) Buyer shall have performed in all material respects each obligation
and agreement and shall have complied in all material respects with each
covenant to be performed and complied with by it hereunder at or prior to the
Closing.
(c) Seller shall receive at or prior to the Closing a certificate as to
the matters set forth in paragraphs (a) and (b) of this Section 10.1, dated
the Closing Date, and validly executed by an executive officer of Buyer on
behalf of Buyer.
Section 10.2. Filings: Consents: Waiting Periods. All waiting periods
applicable under the HSR Act shall have expired or been terminated, and all
registrations, filings, applications, notices, consents, approvals, Orders,
qualifications and waivers required to be obtained or made as of the Closing
Date in order to consummate the transactions contemplated hereby shall have
been filed, made or obtained, except for such registrations, filings,
notices, consents, approvals, Orders, qualifications and waivers the lack of
which would not reasonably be expected to have an Adverse Effect on Buyer or
Buyer and its subsidiaries, taken as a whole.
Section 10.3. No Injunction. At the Closing Date, there shall be no
Order of any nature of any Governmental Authority of competent jurisdiction
that is in effect that restrains or prohibits the consummation of all or any
portion of the Stock Purchase, and no Law shall have been enacted by any
Governmental Authority which prevents consummation of the Stock Purchase.
46
Article XI.
Survival: Indemnification
Section 11.1. Survival Periods. Except as provided in Section 11.4, all
representations and warranties contained or made in, or in connection with,
this Agreement or in any Schedule, or any certificate, document or other
instrument delivered in connection herewith, shall survive the Closing for a
period of eighteen months.
Section 11.2. Indemnification by Seller. From and after the Closing
Date, Raytheon shall indemnify and hold harmless Buyer, the Company, their
Affiliates, each of their directors, officers, employees and agents, and each
of the heirs, executors, successors, transferees and assigns of any of the
foregoing (collectively, the "Buyer Indemnified Parties") from and against
any and all damages, claims, losses, expenses, costs, obligations and
liabilities, including without limitation liabilities for all reasonable
attorneys', accountants', and experts' fees and expenses including those
incurred to enforce the terms of this Agreement (collectively, "Covered
Liabilities"), suffered, incurred by or asserted, directly or indirectly,
against the Buyer Indemnified Parties by reason or arising out of (i) any
breach of any representation or warranty, covenant or agreement of Raytheon
or Seller contained herein (each of which for purposes of this paragraph
shall be read as though none of them contains any Adverse Affect, Change or
Effect or other materiality qualifier), or (ii) any Retained Liability;
provided, however, that, except for a breach of any representation or
warranty in Section 3.15, Raytheon shall not be required to indemnify the
Buyer Indemnified Parties with respect to any claim for indemnification
pursuant to clause (i) of this Section 11.2 unless and until the aggregate
amount of all claims against Raytheon under this Section 11.2 exceeds
$1,000,000 and then only to the extent such aggregate amount exceeds such
amount, and; provided, further, that, except for a breach of any
representation or warranty in Section 3.15, in no event shall Raytheon be
required to pay or otherwise be liable for an amount in excess of $40,000,000
with respect to claims made under clause (i) of this Section.
Section 11.3. Indemnification by Buyer. From and after the Closing
Date, Buyer shall indemnify and hold harmless Raytheon, its Affiliates, each
of their directors, officers, employees and agents, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Raytheon Indemnified Parties") from and against any and all Covered
Liabilities suffered, incurred by or asserted, directly or indirectly,
against by the Raytheon Indemnified Parties by reason or arising out of (i)
any breach of any representation or warranty, covenant or agreement of Buyer
contained herein (each of which for purposes of this paragraph shall be read
as though none of them contains any Adverse Affect, Change or Effect or other
materiality qualifier), or (ii) any Assumed Liability; provided, however,
that Buyer shall not be required to indemnify the Raytheon Indemnified
Parties with respect to any claim made for indemnification pursuant to clause
(i) of this Section 11.3 unless and until the aggregate amount of all claims
against Buyer under this Section 11.3 exceeds $1,000,000 and then only to the
extent such aggregate amount exceeds such amount, and; provided, further,
that in no event shall
47
Buyer be required to pay or otherwise be liable for an amount in excess of
$40,000,000 with respect to claims made under clause (i) of this Section.
Section 11.4. Time Limit on Certain Indemnification Claims. Claims by
Buyer Indemnified Parties for breaches of the representations and warranties
of Raytheon and Seller in Section 3.1 hereof or by Raytheon Indemnified
Parties for breaches of the representations and warranties of Buyer in
Section 4.1 hereof in each case relating to corporate formation, may be
asserted indefinitely. Claims for breaches of all other representations and
warranties in Sections 3.1 and 4.1, and for breaches of representations and
warranties in Sections 3.11, 3.15 and 3.16 may be asserted until 60 days
after the running of the statutes of limitations applicable to contracts,
ERISA, CERCLA and the Code, respectively. Claims for breach of Raytheon's and
Seller's representation and warranty in Section 3.4(a) insofar as it relates
to the Mountain View Facility (other than with respect to encroachments, as
to which Section 5.18 is applicable) shall not survive the Closing, and prior
to Closing may be asserted only in accordance with Section 9.1(d) as a
condition to Buyer's obligation to consummate the Stock Purchase. Time
periods for indemnities provided for in ancillary agreements will be governed
by the provisions of such ancillary agreements.
Section 11.5. Indemnification Procedures. (a) If any indemnified party
receives notice of the assertion of any Third-Party Claim with respect to
which an indemnifying party is obligated under this Agreement to provide
indemnification, such indemnified party shall give such indemnifying party
written notice thereof (together with a copy of such Third-Party Claim,
process or other legal pleading) promptly after becoming aware of such
Third-Party Claim; provided, however, that the failure of any indemnified
party to give notice as provided in this Section 11.5 shall not relieve any
indemnifying party of its obligations under this Section 11.5, except to the
extent that such indemnifying party is actually prejudiced by such failure to
give notice. Such notice shall describe such Third-Party Claim in reasonable
detail.
(b) An indemnifying party, at such indemnifying party's own expense and
through counsel chosen by such indemnifying party (which counsel shall be
reasonably acceptable to the indemnified party), may elect to defend any
Third-Party Claim. If an indemnifying party elects to defend a Third-Party
Claim, then, within ten (10) business days after receiving notice of such
Third-Party Claim (or sooner, if the nature of such Third-Party claim so
requires), such indemnifying party shall notify the indemnified party of its
intent to do so, and such indemnified party shall cooperate in the defense of
such Third-Party Claim (and pending such notice and assumption of defense, an
indemnified party may take such steps to defend against such Third-Party
Claim as, in such indemnified party's good-faith judgment, are appropriate to
protect its interests). Such indemnifying party shall pay such indemnified
party's reasonable out-of-pocket expenses incurred in connection with such
cooperation. Such indemnifying party shall keep the indemnified party
reasonably informed as to the status of the defense of such Third-Party
Claim. After notice from an indemnifying party to an indemnified party of
its election to assume the defense of a Third-Party Claim, such indemnifying
party shall not be liable to such indemnified party under this Section 11.5
for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than those expenses
referred to in
48
the preceding sentence; provided, however, that such indemnified party shall
have the right to employ one law firm as counsel, together with a separate
local law firm in each applicable jurisdiction ("Separate Counsel"), to
represent such indemnified party in any action or group of related actions
(which firm or firms shall be reasonably acceptable to the indemnifying
party) if, in such indemnified party's reasonable judgment at any time,
either a conflict of interest between such indemnified party and such
indemnifying party exists in respect of such claim, or there may be defenses
available to such indemnified party which are different from or in addition
to those available to such indemnifying party and the representation of both
parties by the same counsel would be inappropriate, and in that event (i) the
reasonable fees and expenses of such Separate Counsel shall be paid by such
indemnifying party (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one Separate Counsel
(excluding local counsel) with respect to any Third-Party Claim (even if
against multiple indemnified parties)), and (ii) each of such indemnifying
party and such indemnified party shall have the right to conduct its own
defense in respect of such claim. If an indemnifying party elects not to
defend against a Third-Party Claim, or fails to notify an indemnified party
of its election as provided in this Section 11.5 within the period of ten
(10) business days described above, the indemnified party may defend,
compromise, and settle such Third-Party Claim and shall be entitled to
indemnification hereunder (to the extent permitted hereunder); provided,
however, that no such indemnified party may compromise or settle any such
Third-Party claim without the prior written consent of the indemnifying
party, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, the indemnifying party shall not, without the
prior written consent of the indemnified party, (i) settle or compromise any
Third-Party Claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the delivery by the claimant or
plaintiff to the indemnified party of a written release from all liability in
respect of such Third-Party Claim, or (ii) settle or compromise any
Third-Party Claim in any manner that would reasonably be expected to have a
material adverse effect on the indemnified party.
Section 11.6. Certain Limitations. (a) The amount of any Covered
Liabilities for which indemnification is provided under this Agreement shall
be net of any amounts actually recovered by the indemnified party from third
parties (including amounts actually recovered under insurance policies, but
only to the extent any recovered insurance proceeds exceed costs of
collecting such proceeds and premium increases, whether retrospective or
prospective, that are certified by the underwriter to result from the claim
for such proceeds) with respect to such Covered Liabilities. Any indemnifying
party hereunder shall be subrogated to the rights of the indemnified party
upon payment in full of the amount of the relevant indemnifiable loss. An
insurer who would otherwise be obligated to pay any claim shall not be
relieved of the responsibility with respect thereto or, solely by virtue of
the indemnification provision hereof, have any subrogation rights with
respect thereto. If any indemnified party recovers an amount from a third
party in respect of an indemnifiable loss for which indemnification is
provided in this Agreement after the full amount of such indemnifiable loss
has been paid by an indemnifying party or after an indemnifying party has
made a partial payment of such indemnifiable loss and the amount received
from the third party exceeds the remaining unpaid balance of such
indemnifiable loss, then the indemnified party shall promptly remit to the
49
indemnifying party the excess of (A) the sum of the amount theretofore paid
by such indemnifying party in respect of such indemnifiable loss plus the
amount received from the third party in respect thereof, less (B) the full
amount of such Covered Liabilities.
(b) Any indemnity payment made under this Agreement shall be treated by
Buyer and Seller as an adjustment to the Purchase Price, and Seller and
Buyer agree not to take any position inconsistent therewith for any purpose.
(c) Claims indemnifiable hereunder that are asserted within the periods
permitted under Sections 11.1 and 11.4 shall, notwithstanding the passage of
time beyond such periods, remain indemnifiable until enforced or compromised
and satisfied in favor of, or withdrawn by, the indemnitee. The limitations
on liability for indemnification set forth in the proviso clauses of Sections
11.2 and 11.3 shall not apply to any Covered Liability resulting from (i) a
breach of representation or warranty contained herein committed with the
knowledge of Raytheon or Buyer, as the case may be or (ii) an intentional
breach of a covenant within the control of Raytheon or Buyer, as the case may
be.
Section 11.7. Exclusivity of Indemnification. This Article XI shall not
limit any right of indemnification for Employee Benefit Matters (for which
Article VI is applicable), of indemnification for Tax Matters (for which
Article VII is applicable), of indemnification for Environmental Matters (for
which Article VIII is applicable) or of indemnification for intellectual
property matters (for which Article V and ancillary agreements are
applicable). The limitations contained in this Article XI relate solely to
indemnification and nothing contained in this Agreement shall limit in any
manner the rights of any party hereto to assert any claim against any other
party hereto for breach of any term or condition of this Agreement.
Article XII.
Termination
Section 12.1. Termination. This Agreement may be terminated at any time
prior to the Closing by:
(a) The mutual written consent of Raytheon and Buyer; or
(b) Either Raytheon or Buyer if the Closing has not occurred by the
close of business on December 31, 1997 (which date shall be extended until
two (2) days after expiration of the notice period under the HSR Act or
receipt by each of notice of clearance under the HSR Act), and if the failure
to consummate the Stock Purchase on or before such date did not result from
the failure by the party seeking termination of this Agreement to fulfill any
undertaking or commitment provided for herein that is required to be
fulfilled prior to Closing.
(c) Raytheon, provided that neither it nor Seller is then in breach of
any of its obligations hereunder, if Buyer fails to perform in any material
respect
50
any covenant in this Agreement when performance thereof is due or Buyer shall
have breached in any material respect any of the representations or
warranties contained in this Agreement and does not cure the failure or
breach within thirty (30) business days after Raytheon delivers written
notice thereof; or
(d) Buyer, provided it is not then in breach of any of its obligations
hereunder, if Raytheon or Seller fails to perform in any material respect any
covenant in this Agreement when performance thereof is due or Raytheon or
Seller shall have breached in any material respect any of the representations
and warranties contained in this Agreement and does not cure the failure or
breach within thirty (30) business days after Buyer delivers written notice
thereof.
Section 12.2. Procedure and Effect of Termination. In the event of
termination of this Agreement by either or both of Raytheon and Buyer
pursuant to Section 12.1, written notice thereof shall forthwith be given by
the terminating party to the other party hereto, and this Agreement shall
thereupon terminate and become void and have no effect, and the transactions
contemplated hereby shall be abandoned without further action by the parties
hereto, except that the provisions of Sections 5. l(b) and 13.4 hereof shall
survive the termination of this Agreement; provided, however, that such
termination shall not relieve any party hereto of any liability for any
breach of this Agreement. If this Agreement is terminated as provided herein,
all filings, applications and other submissions made pursuant to Sections 3.8
and 4.3 hereof shall, to the extent practicable, be withdrawn from the agency
or other persons to which they were made.
Article XIII.
Miscellaneous
Section 13.1. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party.
Section 13.2. Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts without reference to the choice of law
principles thereof. Buyer, Raytheon and Seller consent to and hereby submit
to the exclusive jurisdiction of any state or federal court located in the
Commonwealth of Massachusetts in connection with any action, suit or
proceeding arising out of or relating to this Agreement, and each of the
parties hereto irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Section 13.3. Entire Agreement. This Agreement (including agreements
incorporated herein) and the Schedules and Exhibits hereto contain the entire
agreement between the parties with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties
between the parties other than those set forth or referred to herein.
51
Section 13.4. Expenses. Except as set forth in this Agreement, whether
the Stock Purchase is or is not consummated, all legal and other costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses; provided that Buyer shall pay all transfer taxes, if any, relating
to the transfer of the Shares.
Section 13.5. Notices. All notices hereunder shall be sufficiently given
for all purposes hereunder if in writing and delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to Seller shall be addressed to:
Raytheon Company
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxx, Vice President and Group Executive
X. Xxxxxx D'Avignon, Esq., Assistant General Counsel
Telecopy No: (000) 000-0000
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy No: (000) 000-0000
or at such other address and to the attention of such other Person as Seller
may designate by written notice to Buyer. Notices to Buyer shall be addressed
to:
Xxxxxxxxx Semiconductor Corporation
000 Xxxxxxx Xxxxxx, M.S. 00-00
Xxxxx Xxxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx, Executive Vice President and Chief
Financial Officer
Xxxxxx X. Xxxxx, Esq., Executive Vice President and General Counsel
Telecopy No. (000) 000-0000
with a copy to:
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: G. Xxxxxx X'Xxxxxxx, Esq.
Telecopy No. (000) 000-0000
52
or at such other address and to the attention of such other Person as Buyer
may designate by written notice to Seller.
Section 13.6. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that no party hereto will assign
its rights or delegate its obligations under this Agreement without the
express prior written consent of each other party hereto, except that (i)
Buyer may assign its rights hereunder as collateral security to any bona fide
financial institution engaged in acquisition financing in the ordinary course
providing financing to consummate the transactions contemplated hereby or any
bona fide financial institution engaged in acquisition financing in the
ordinary course through which such financing is refunded, replaced or
refinanced and any of the foregoing financial institutions may assign such
rights in connection with a sale of Buyer or the Company in the form then
being conducted by Buyer substantially as an entirety, (ii) Seller, Buyer and
the Company each may assign its rights and obligations under this Agreement
to any Entity that succeeds to substantially all of its assets and
liabilities and (iii) the Company (and any subsequent owner of the Mountain
View Facility) may assign its rights under clauses (a), (b) and (c) of
Section 8.1, insofar as they relate to the Mountain View Facility, to any
transferee of the Mountain View Facility.
Section 13.7. Headings: Definitions. The section and article headings
contained in this Agreement are inserted for convenience of reference only
and will not affect the meaning or interpretation of this Agreement. All
references to Sections or Articles contained herein mean Sections or Articles
of this Agreement unless otherwise stated.
Section 13.8. Amendment. This Agreement may not be amended, modified,
superseded, canceled, renewed or extended except by a written instrument
signed by the party to be charged therewith.
Section 13.9. Waiver; Effect of Waiver. No provision of this Agreement
may be waived except by a written instrument signed by the party waiving
compliance. No waiver by any party hereto of any of the requirements hereof
or of any of such party's rights hereunder shall release the other parties
from full performance of their remaining obligations stated herein. No
failure to exercise or delay in exercising on the part of any party hereto
any right, power or privilege of such party shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof or the exercise of
any other right, power or privilege by such party.
Section 13.10. No Third Party Beneficiaries. Nothing in this Agreement,
express or implied, is intended to or shall (i) confer on any Person other
than the parties hereto and their respective successors or assigns any rights
(including third party beneficiary rights), remedies, obligations or
liabilities under or by reason of this Agreement, or (ii) constitute the
parties hereto as partners or as participants in a joint venture. This
Agreement shall not provide third parties
53
with any remedy, claim, liability, reimbursement, cause of action or other
right in excess of those existing without reference to the terms of this
Agreement.
Section 13.11. Interpretation; Absence of Presumption. (a) For the
purposes hereof, (i) words in the singular shall be held to include the
plural and vice versa and words of one gender shall be held to include the
other gender as the context requires, (ii) the terms "hereof" "herein," and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the
Schedules hereto) and not to any particular provision of this Agreement, and
Article, Section, paragraph and Schedule references are to the Articles,
Sections, paragraphs and Schedules to this Agreement unless otherwise
specified, (iii) the word "including" and words of similar import when used
in this Agreement means "including, without limitation," unless the context
otherwise requires or unless otherwise specified, (iv) the word "or" shall
not be exclusive, (v) provisions shall apply, when appropriate, to successive
events and transactions, and (vi) all references to any period of days shall
be deemed to be to the relevant number of calendar days.
(b) This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting
or causing any instrument to be drafted.
(c) For the purposes of this Agreement, a "subsidiary" of a Person
means any corporation more than 50% of whose outstanding voting securities
are directly or indirectly owned by such other Person.
Section 13.12. Arbitration. In the event a dispute arises under this
Agreement, the parties agree, at either's request, to submit such dispute to
final and binding arbitration by a single arbitrator in accordance with the
commercial arbitration rules of the American Arbitration Association. The
arbitration location shall be decided by the parties jointly or, if no
agreement is reached, the arbitration shall be held in Boston, Massachusetts.
Each party shall bear its own expenses and will share equally in
arbitrator's fees and related expenses provided that once an arbitration
judgment is entered, the prevailing party shall be entitled to recover
attorneys' and/or expert fees and related costs as damages. The arbitrator
will determine what discovery, if any, is appropriate. Judgment on the award
rendered by the arbitrator may be entered in a court having competent
jurisdiction. In no event will any award include consequential, exemplary,
multiple or punitive damages notwithstanding any Law entitling a party to
claim such.
Section 13.13. Specific Performance. The parties hereto each acknowledge
that, in view of the uniqueness of the subject matter hereof, the parties
hereto would not have an adequate remedy at law for money damages in the
event that this Agreement were not performed in accordance with its terms,
and therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled at law or in equity.
54
Section 13.14. Remedies Cumulative. Except as otherwise provided in
Article 11, all rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party. Notwithstanding the
foregoing, however, no party hereto shall be liable for and no remedy under
this Agreement or at law or in equity shall include, provide for or permit
the payment of multiple, exemplary, punitive or consequential damages or any
equitable equivalent thereof or substitute therefor, and the burden shall be
on the party claiming loss to show actual loss in the amount claimed.
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their behalf as of the date first written above.
RAYTHEON COMPANY
By/s/ Xxxxx X. Xxxxxxx
----------------------
Xxxxx X. Xxxxxxx
Vice President - Strategic
Business Development
THORNWOOD TRUST
By /s/ Xxxxx X. Xxxxxxx
----------------------
Xxxxx X. Xxxxxxx
XXXXXXXXX SEMICONDUCTOR
CORPORATION
By /s/ Xxxxxx X. Xxxxxx
----------------------
Xxxxxx X. Xxxxxx
Executive Vice President and
Chief Financial Officer
List of Omitted Schedules and Exhibits
(This list is not a part of the Acquisition Agreement)
Schedule I Real Property Interests
Schedule II List of Executive Personnel
Schedule 2.4(i) Target Balance Sheet
Schedule 3.1(b) Incorporation and Authorization; Material Restrictions
Schedule 3.2 Financial Statements
Schedule 3.5(a) Intellectual Property (Owned)
Schedule 3.5(b) Intellectual Property (Licensed to Semiconductor)
Schedule 3.5(c) Intellectual Property (Licensed to Third Parties)
Schedule 3.5(d) Intellectual Property (Infringement Claims)
Schedule 3.7 Litigation
Schedule 3.8 Licenses
Schedule 3.9 Labor Agreements
Schedule 3.10(i) Compliance with Law
Schedule 3.10(ii) Material Licenses
Schedule 3.11(i) "Parachute Payments"
Schedule 3.12(a) Material Contracts (Employment and Consulting Agreements)
Schedule 3.12(b) Material Contracts (Distributor and Manufacturer Contracts)
Schedule 3.12(c) Joint Venture Agreements
Schedule 3.12(d) Material Contracts (Material Contracts Requiring Consent)
Schedule 3.12(e) Material Contracts (Notes, Mortgages, Indentures)
Schedule 3.12(f) Material Contracts (Purchases of Goods and Services)
Schedule 3.12(g) Material Contracts (Sale of Goods and Services)
Schedule 3.12(h) Material Contracts (Other Contracts)
Schedule 3.12 Material Contracts (Contracts with Raytheon or Affiliates of
Raytheon)
Schedule 3.15(a)(i) Environmental Matters (Licenses)
Schedule 3.15(a)(ii) Environmental Matters (Compliance with Law)
Schedule 3.15(a)(iii) Environmental Matters (Notices)
Schedule 3.15(b)(i) Environmental Matters (Management of Hazardous Substances)
Schedule 3.15(b)(ii) Environmental Matters (Listing on Government lists)
Schedule 3.15(b)(iii) Environmental Matters (Underground Storage Tanks)
Schedule 3.15(b)(iv) Environmental Matters (Releases of Hazardous
Substances)
Schedule 3.16 Tax Matters
Schedule 5.4 Conduct of Business
Schedule 6.1(a) List of Employees
Schedule 6.5(a) Description of Incentive Plans
Schedule 8.4 OSHA Matters
Exhibit 5.15 Form of Transition Services Agreement
