EXHIBIT 2.01
AMENDED AND RESTATED
MASTER TRANSACTION AGREEMENT
among
INTERSIL HOLDING CORPORATION,
INTERSIL CORPORATION
and
▇▇▇▇▇▇ CORPORATION
June 2, 1999
TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS AND RULES OF CONSTRUCTION .................................. 1
1.1 Definitions ................................................... 1
ARTICLE 2 SALE AND PURCHASE OF THE ASSETS ........................................ 1
2.1 Transferred Assets ............................................ 1
2.2 Excluded Assets ............................................... 4
2.3 Assumption of Liabilities...................................... 6
2.4 Excluded Liabilities........................................... 8
2.5 Election to Transfer Assets Using Subsidiary................... 10
2.6 Election to Transfer United Kingdom Assets..................... 10
ARTICLE 3 THE CLOSING ............................................................ 10
3.1 Place and Date ................................................ 10
3.2 Purchase Price ................................................ 11
3.3 Allocation of Purchase Price; Section 338(h)(10) Elections..... 11
3.4 Deliveries .................................................... 12
3.5 Closing Balance Sheet.......................................... 12
3.6 Post-Closing Purchase Price Adjustment......................... 13
3.7 Limitations.................................................... 14
3.8 Consent of Third Parties; Further Assurances .................. 14
3.9 Shared Contracts............................................... 15
3.10 Apportionment at Closing Date; Customer Billing................ 15
3.11 Warranty Claims................................................ 16
3.12 Purchase Agreement for ▇▇▇▇▇▇ Malaysia......................... 16
3.13 Deferred Closing............................................... 16
3.14 Environmental Consents......................................... 16
3.15 Pennsylvania Indebtedness...................................... 16
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇ ............................... 17
4.1 Organization, Standing, Etc. of Business Entities.............. 17
4.2 Corporate Authorization; Enforceability ....................... 17
4.3 Charters and Bylaws; Capitalization of Transferred
Subsidiaries .................................................. 18
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4.4 No Violations ................................................. 18
4.5 Governmental Authorizations and Consents ...................... 18
4.6 Compliance with Other Instruments and Laws .................... 18
4.7 Baseline Financial Statements ................................. 19
4.8 Absence of Certain Changes or Events .......................... 19
4.9 Title to Transferred Assets ................................... 21
4.10 Year 2000 Readiness ........................................... 24
4.11 Assumed Contract Obligations .................................. 24
4.12 Litigation .................................................... 26
4.13 Licenses and Permits .......................................... 26
4.14 Environmental Compliance ...................................... 26
4.15 Absence of Certain Business Practices ......................... 27
4.16 Personnel Matters ............................................. 27
4.17 Labor Matters ................................................. 28
4.18 Seller Benefit Plans........................................... 28
4.18.1 United States....................................... 28
4.18.2 Non-U.S. Employee Benefit Plans..................... 30
4.19 Insurance ..................................................... 31
4.20 Powers of Attorney............................................. 31
4.21 Brokers ....................................................... 31
4.22 Taxes.......................................................... 32
4.23 Transferred Assets - General................................... 33
4.24 Personal Property.............................................. 33
4.25 Warranty Claims................................................ 33
4.26 Inventory...................................................... 34
4.27 Malaysian Activities........................................... 34
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT ..................... 34
5.1 Organization and Standing of Buyer and Parent; Charter
and Bylaws .................................................... 34
5.2 Authorization ................................................. 35
5.3 Enforceability ................................................ 35
5.4 Compliance with Other Instruments and Laws .................... 35
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5.5 Governmental Authorizations and Consents ...................... 35
5.6 Litigation .................................................... 36
5.7 Access......................................................... 36
5.8 Financial Capacity ............................................ 36
5.9 Brokers........................................................ 36
5.10 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976........... 36
ARTICLE 6 COVENANTS RELATING TO PERSONNEL ARRANGEMENTS............................ 36
6.1 Employees; Collective Bargaining Agreements;
Transferee Employees........................................... 36
6.2 Severance Obligations.......................................... 37
6.3 Plans, Benefits and Policies................................... 38
6.4 Foreign Employees.............................................. 39
6.5 Commissions and Bonuses........................................ 40
ARTICLE 7 COVENANTS OF SELLERS ................................................... 40
7.1 Conduct of Business ........................................... 40
7.2 Non-Competition................................................ 42
7.3 Access......................................................... 43
7.4 Environmental Transfer Statutes ............................... 44
7.5 Title Insurance................................................ 44
7.6 Surveys........................................................ 45
7.7 Estoppel Certificates.......................................... 45
7.8 Zoning Letters................................................. 45
7.9 Foreign Real Estate -- Due Diligence and Assurances............ 45
7.10 No Shop........................................................ 46
ARTICLE 8 COVENANTS OF BUYER AND PARENT .......................................... 46
8.1 Investigation ................................................. 46
8.2 Assistance with Respect to Excluded Assets .................... 46
8.3 Names and Logo ................................................ 46
8.4 Space Used by ▇▇▇▇▇▇ ESS....................................... 46
8.5 Reimbursement and Indemnity for Certain Costs and
Liabilities.................................................... 47
ARTICLE 9 COVENANTS OF ALL PARTIES ............................................... 47
9.1 Commercially Reasonable Efforts ............................... 47
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9.2 HSR Filing; Other Filings ..................................... 47
9.3 Public Announcements .......................................... 48
9.4 Consents; Cooperation ......................................... 48
9.5 Communications with Customers and Suppliers ................... 48
9.6 Liability for Transfer Taxes................................... 49
9.7 Tax Matters.................................................... 49
9.7.1 Tax Returns........................................... 49
9.7.2 Indemnity............................................. 50
9.7.3 Tax Liability......................................... 51
9.7.4 Tax Contests.......................................... 51
9.7.5 Cooperation........................................... 52
9.7.6 Transfer Pricing Agreements and Related
Documentation......................................... 53
9.8 Tax Elections.................................................. 53
9.9 Confidentiality................................................ 53
9.10 Books and Records.............................................. 54
9.11 Ancillary Agreements........................................... 54
9.12 Obligations Concerning China Subsidiaries...................... 54
9.13 ▇▇▇▇▇▇ Lease................................................... 55
9.14 Ownership of Intersil Name..................................... 56
ARTICLE 10 CONDITIONS TO OBLIGATIONS OF BUYER AND PARENT TO CLOSE ................. 56
10.1 Accuracy of Representations and Warranties .................... 56
10.2 Performance ................................................... 56
10.3 No Conflict ................................................... 57
10.4 Material Adverse Change........................................ 57
10.5 Certificate ................................................... 57
10.6 HSR Act ....................................................... 57
10.7 Consents ...................................................... 57
10.8 Transfer Documents ............................................ 57
10.9 Transaction Documents.......................................... 58
10.10 Resignations................................................... 58
10.11 Corporate Records.............................................. 58
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10.12 Further Instruments............................................ 58
10.13 Sellers' Counsel Opinion....................................... 58
10.14 Financing...................................................... 58
10.15 Environmental Transfer Statutes................................ 58
10.16 Possession..................................................... 58
10.17 Working Capital Amount......................................... 58
10.18 Real Estate Matters............................................ 58
10.19 Real Property Agreements....................................... 58
10.20 ▇▇▇▇▇▇ Advanced Technology (Malaysia) Sdn Bhd.................. 58
ARTICLE 11 CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇▇ TO CLOSE ........................... 59
11.1 Accuracy of Representations and Warranties .................... 59
11.2 Performance ................................................... 59
11.3 No Conflict ................................................... 59
11.4 Certificate ................................................... 60
11.5 HSR Act ....................................................... 60
11.6 Consents ...................................................... 60
11.7 Assumption Agreement .......................................... 60
11.8 Transaction Documents.......................................... 60
11.9 Buyer's Counsel Opinion........................................ 60
11.10 Further Instruments............................................ 60
11.11 Financing...................................................... 60
11.12 Working Capital Amount......................................... 60
11.13 Royalty Agreement.............................................. 60
ARTICLE 12 TERMINATION ............................................................ 61
12.1 Right to Terminate Agreement .................................. 61
12.2 Effect of Termination ......................................... 61
ARTICLE 13 CERTAIN REMEDIES AND LIMITATIONS ....................................... 62
13.1 Expiration of Representations, Warranties and Covenants ....... 62
13.2 Indemnity by ▇▇▇▇▇▇ ........................................... 62
13.3 Indemnity by Buyer and Parent.................................. 63
13.4 General Indemnification Procedures ............................ 63
13.5 Environmental Procedures....................................... 65
13.6 Costs Related to Direct Claims................................. 67
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13.7 Exclusivity ................................................... 67
13.8 No Set-Off..................................................... 67
13.9 Retention of Records .......................................... 68
13.10 Notice as to Representations .................................. 68
13.11 Separate Indemnification for Taxes ............................ 68
13.12 Indemnification Payments as Purchase Price Adjustment.......... 68
ARTICLE 14 MISCELLANEOUS .......................................................... 69
14.1 Material Adverse Effect ....................................... 69
14.2 Disclaimer of Projections, Etc. ............................... 69
14.3 Expenses ...................................................... 69
14.4 Compliance with Bulk Sales Laws................................ 69
14.5 Inconsistencies................................................ 69
ARTICLE 15 AGREEMENT CONVENTIONS................................................... 70
SCHEDULES
Schedule Subject Matter
-------- --------------
2.1(a) Owned Fixed Assets
2.1(d) Equity Interests of Transferred Subsidiaries
2.1(t) Other Transferred Assets
2.2(t) Other Excluded Assets
2.3 Mountaintop, Pennsylvania Facility Debt
2.4 Other Excluded Liabilities
4.3 Capitalization of Transferred Subsidiaries
4.4 Seller Violations
4.5 Government Authorizations and Consents Required by Sellers
4.6 Compliance with Other Instruments and Laws
4.7 Financial Statements
4.8 Certain Changes and Events
4.9(a) Title to Transferred Assets Other than Real Estate
4.9(b) Title to and Duality of Real Estate
4.11 Contractual Obligations
4.12 Litigation
4.13 Licenses and Permits Exceptions
4.14 Environmental Compliance Exceptions
4.16(b) Disputes between Employees and Business Entities
4.16(c) Employee Policies and Manuals
4.17 Labor Orders and Disputes
4.18 Seller Benefit Plans
4.19 Insurance Policies
4.20 Powers of Attorney
4.22 Tax Matters
4.23 Exceptions to Transferred Assets
4.24 Personal Property Operation Exceptions
Schedule Subject Matter
-------- --------------
4.25 Warranty Claims
5.5 Government Authorizations and Consents Required by Buyer
7.1 Covenants of Sellers
10.7 Consents That Are Conditions to Buyer's Obligations
11.6 Consents That Are Conditions to Sellers' Obligations
EXHIBITS
A. Definitions and Rules of Construction
B. Agreement Conventions
C. Intellectual Property Agreement
D. Patent Assignment and Services Agreement
E. License Assignment Agreement
▇. ▇▇▇▇▇▇ Trademark License Agreement
G. Secondary Trademark Assignment and License Agreement
H. Transition Services Agreement
I. Subordinated Promissory Note
J. Indenture
K. Securities Purchase and Holders Agreement
L. Registration Rights Agreement
AMENDED AND RESTATED MASTER TRANSACTION AGREEMENT
THIS AMENDED AND RESTATED MASTER TRANSACTION AGREEMENT (this "Master
Agreement") is entered into as of June 2, 1999, by and among intersil
CORPORATION, a Delaware corporation ("Buyer"), intersil HOLDING CORPORATION, a
Delaware corporation ("Parent"), and ▇▇▇▇▇▇ CORPORATION, a Delaware corporation
("▇▇▇▇▇▇").
RECITALS
WHEREAS, ▇▇▇▇▇▇, through the ▇▇▇▇▇▇ Semiconductor Sector (as defined in
Exhibit A), including the Transferred Subsidiaries, is engaged in the business
(the "Business", as defined in Exhibit A) of defining, designing, developing,
manufacturing and selling integrated circuits and other semiconductors and
related products and certain other activities related thereto;
WHEREAS, Parent, the direct parent of Buyer, owns directly all of the stock
of Buyer and desires to assist Buyer in acquiring the assets and liabilities to
be conveyed hereunder;
WHEREAS, Buyer and Parent wish to purchase and acquire from ▇▇▇▇▇▇, and
▇▇▇▇▇▇ wishes to sell, assign and transfer to Buyer and Parent, certain assets
of the Business, and Buyer and Parent have agreed to assume certain specified
liabilities of the Business, all for the purchase price, and upon the terms and
subject to the conditions, herein set forth; and
WHEREAS, following the closing of the transactions contemplated by this
Master Agreement, Buyer and ▇▇▇▇▇▇ will have certain ongoing business
relationships as set forth in the Ancillary Agreements (as defined in Exhibit
A).
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties and covenants hereinafter set forth, and intending
to be legally bound hereby, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND RULES OF CONSTRUCTION
1.1 Definitions. The definitions and rules of construction set forth in
Exhibit A are incorporated herein by reference.
ARTICLE 2
SALE AND PURCHASE OF THE ASSETS
2.1 Transferred Assets. Subject to and upon the terms and conditions set
forth in this Master Agreement, at the Closing, ▇▇▇▇▇▇ shall, or shall cause the
other Sellers to, sell, assign, transfer, convey and deliver to Buyer (or, as to
certain assets selected by Buyer, at
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Buyer's written request to ▇▇▇▇▇▇ five (5) Business Days prior to the Closing
Date, to Parent), and Buyer and Parent shall purchase and acquire from each
Seller, all right, title and interest of each Seller in and to all of the
properties, assets, contracts and rights constituting or primarily used or held
primarily for use in the Business (other than the Excluded Assets), wherever
such assets, properties and rights are located and whether such assets are real,
personal or mixed, tangible or intangible, matured or unmatured, known or
unknown, contingent or fixed, and whether or not any of such assets have any
value for accounting purposes or are carried or reflected on or specifically
referred to in Sellers' books or financial statements (collectively, the
"Transferred Assets"), including, without limitation, the assets listed below
(as listed below, the Transferred Assets include properties, contracts, rights
and assets owned by the Transferred Subsidiaries and all such properties,
contracts, rights and assets shall be transferred indirectly by transferring the
capital stock of the Transferred Subsidiaries):
(a) all of the Fixed Assets described on Schedule 2.1(a);
(b) all of the Owned Real Estate;
(c) the assets and rights conveyed pursuant to the terms of the IP
Transfer Agreements;
(d) all ownership interests in the Transferred Subsidiaries listed on
Schedule 2.1(d);
(e) all of the Assumed Contract Obligations, including those under the
Material Contracts listed on Schedule 4.11;
(f) all inventory, wherever located (including inventory in transit),
including, without limitation, all the raw materials, work in process,
recycled materials, finished products, supplies, and spare parts located at
the Manufacturing Facilities or elsewhere and primarily used or held
primarily for use in the conduct of the Business, including items of the
type and nature of the materials identified as inventory in the Baseline
Financial Statements;
(g) all of the furniture and office equipment, including desks,
tables, chairs, file cabinets and other storage devices, communications
equipment, computers and office supplies which are owned or leased by a
Seller and located at the Transferred Facilities or elsewhere and that are
primarily used or held primarily for use in the conduct of the Business, or
that are in transit to or temporarily removed from a location specified
above and which would otherwise be included among the items identified
above;
(h) all of the prepaid expenses and security deposits reflected on the
Audited Closing Balance Sheet;
(i) all of the Books and Records;
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(j) to the extent their transfer is permitted by Applicable Law, all
Governmental Approvals primarily used or held primarily for use in the
Transferred Facilities or the Business, including all applications
therefor;
(k) to the extent transferable, all rights under express or implied
warranties and licenses from Sellers' suppliers (including manufacturers
and distributors) with respect to the Transferred Assets and any related
claims, credits, rights of recovery and set-off with respect to such items;
(l) all rights to causes of action, lawsuits, claims and demands of
any nature available to the Business Entities that relate primarily to the
Transferred Assets (it being understood that Buyer's rights to causes of
action, lawsuits, claims and demands in respect of Patents and Intangible
Property Rights are governed by the IP Transfer Agreements) or the Assumed
Liabilities;
(m) to the extent transferable, all guarantees, warranties,
indemnities and similar rights in favor of Sellers in connection with the
Transferred Assets and any related claims, credits, rights of recovery and
set-off with respect thereto;
(n) the Policies;
(o) all of the Leased Real Estate, except for the Retained Leased Real
Estate;
(p) all of the motor vehicles, whether or not licensed or registered
to operate on public highways, including automobiles, trucks,
self-propelled carts, and other motorized lifting, material handling or
transporting equipment and all spare parts, fuel and other supplies, tools
and other items used in the operation or maintenance thereof which are
owned or leased by a Seller and located at the Transferred Facilities or
elsewhere and which are primarily used or held for use primarily in the
conduct of the Business, or which are in transit to or temporarily removed
from a location specified above and which would otherwise be included among
the items described above;
(q) all rights of the Business Entities to any insurance proceeds
relating to the damage, destruction or impairment of assets or other rights
described in this Section 2.1 which would have been Transferred Assets but
for such damage, destruction or impairment prior to the Closing;
(r) all assets (other than Excluded Assets) reflected in the April 2,
1999 balance sheet which is included in the Baseline Financial Statements,
together with all replacements thereof, all expansions, enhancements and
modifications thereto and all assets (other than Excluded Assets) of like
character that have been or are acquired by the Business Entities
subsequent to such balance sheet date and on or prior to the Closing Date,
primarily for use in the Business, except to the extent such assets have
been disposed of in the ordinary course of business on or after such date;
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(s) foreign currency ▇▇▇▇▇▇ related primarily to the operations of the
Business;
(t) all the items, if any, listed on Schedule 2.1(t);
(u) unrestricted cash on deposit in the United States, as of the close
of business on the Closing Date, in the amount of $2,000,000;
(v) [RESERVED]; and
(w) cash (to be transferred to Buyer at the time other assets of
▇▇▇▇▇▇ Semiconductor GmbH (Germany) are transferred to Buyer) in Germany in
an amount equivalent to the amount accrued as of the Closing Date, as
reflected in the Audited Closing Balance Sheet, for all German pension
obligations including that disclosed on Schedule 4.18.2 and unrestricted
cash in the United States in an amount equivalent to the amount accrued as
of the Closing Date, as reflected in the Audited Closing Balance Sheet, for
obligations with respect to Transferred Employees, whether based inside or
outside the United States, under ▇▇▇▇▇▇' supplemental employee retirement
plan.
In addition to the foregoing, Sellers shall sublease to Buyer all or such
portions of the Retained Leased Real Estate as Sellers and Buyer may mutually
agree in writing upon prior to the Closing (all of such subleased real estate,
the "Subleased Real Estate") under and pursuant to subleases in form and
substance mutually acceptable to Sellers and Buyer (collectively, the
"Subleases") and, except where specifically excluded, as used herein the term
"Transferred Assets" includes the Subleased Real Estate.
The assets to be acquired by Parent shall consist of the Intellectual
Property as may be specified in accordance with Section 2.1, and if the fair
market value of the Intellectual Property shall be less than ninety million
dollars ($90,000,000), with such difference in value being called the Parent
Additional Assets Value, the Parent will acquire additional Transferred Assets
having an aggregate fair market value equal to the Parent Additional Assets
Value. The assets acquired by Parent (other than certain Intellectual Property
determined by Parent) shall be transferred by Parent to Buyer as a capital
contribution immediately following the Closing, and Parent hereby directs that
▇▇▇▇▇▇ transfer at Closing such assets directly to Buyer on its behalf. All
other Transferred Assets shall be acquired directly by Buyer from ▇▇▇▇▇▇.
Buyer shall be permitted to have the acquisition of any Transferred
Subsidiary not formed or incorporated in a state of the United States to be made
by a wholly-owned subsidiary of Buyer incorporated under the laws of any
jurisdiction, including, but not limited to, the laws of Malaysia.
2.2 Excluded Assets. Notwithstanding anything contained in Section 2.1
hereof to the contrary, the Transferred Assets do not include any of the
following (herein referred to collectively as the "Excluded Assets"):
(a) except to the extent set forth in the IP Transfer Agreements, the
names and marks "▇▇▇▇▇▇" and "▇▇▇▇▇▇ Corporation" and any name or ▇▇▇▇
derived from or
4
including the foregoing, including all corporate symbols or logos
incorporating "▇▇▇▇▇▇" or "▇▇▇▇▇▇ Corporation";
(b) the rights in Intellectual Property, Intangible Property Rights,
License Agreements and Software Licenses not transferred, assigned or
licensed to Buyer in accordance with the terms of the IP Transfer
Agreements;
(c) all cash, and cash equivalents, and similar type investments, such
as certificates of deposit, treasury bills and other marketable securities,
as of the close of business on the Closing Date including any such items
remaining with any of the Transferred Subsidiaries or with any of the other
Transferred Assets as of the Closing Date, but excluding the cash specified
in Sections 2.1 (u) and (w);
(d) intercompany receivables and payables arising from the conduct of
the Business prior to the Closing Date (which receivables and payables
shall be settled as of the Closing Date as provided in Section 7.1(c));
(e) all books and records relating to or used in the business of
Sellers which are not primarily used or held primarily for use in the
conduct of Business;
(f) except for the Policies, all insurance policies maintained by the
Business Entities and all rights of action, lawsuits, claims and demands,
rights of recovery and set-off, and proceeds, under or with respect to such
insurance policies;
(g) all rights to causes of action, lawsuits, claims and demands
available to or being pursued by Sellers as of the Closing Date to the
extent they do not relate to the Business or they relate to Excluded Assets
or Excluded Liabilities;
(h) all claims against third parties for Losses suffered in connection
with Excluded Assets and Excluded Liabilities;
(i) all right, title and interest of the Business Entities in and to
and any claims for any refund, credit, rebate or abatement with respect to
Taxes of the Business for any period or portion thereof prior to the
Closing Date;
(j) any of Business Entities' right, title, estate or interest in any
of the Retained Leased Real Estate or the Retained Leases, except for
Buyer's right, title, estate and interest in the Subleased Real Estate
under the Subleases;
(k) all assets relating to Seller Benefit Plans, except as
specifically provided in Article 6;
(l) to the extent owned or held, directly or indirectly, by the
Business Entities, all equity interests in, and debt if any of, Guangzhou
▇▇▇▇▇▇ Telecommunications Company Ltd. and Anshan ▇▇▇▇▇▇ Broadcast
Equipment Company Ltd.;
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(m) the assets that are identified on Exhibit D to the Transition
Services Agreement;
(n) except to the extent provided under the Ancillary Agreements
following the Closing Date, the Transition Services Software and services
available to the Business Entities that are not primarily used or held
primarily for use in the Business as conducted prior to the Closing Date;
(o) assets and rights primarily used or held primarily for use in the
Sellers' Suppression Business conducted primarily from Dundalk, Ireland;
(p) assets and rights (including the right to occupy specified
premises in the Manufacturing Facility in Palm Bay, Florida under and
pursuant to a lease or other agreement or arrangement mutually reasonably
acceptable in form and substance to Buyer and Sellers) primarily used or
held primarily for use in the Sellers' Photomask Business conducted
primarily from Palm Bay, Florida;
(q) all rights to any royalty payments made pursuant to the Retained
License Agreements;
(r) the fabrication inventory in process with respect to Suppression
Products of the Sellers at the Findlay, Ohio facilities of the Business;
(s) the value of assembly and testing services in process with respect
to Suppression Products of the Sellers on consignment for assembly and
testing at the Kuala Lumpur facilities of the Business;
(t) the assets listed on Schedule 2.2(t);
(u) ▇▇▇▇▇▇ corporate assets not primarily used in the Business but
which have been made available to the Business, and which are not either
(i) reflected on the Baseline Financial Statements, or (ii) necessary to
the day-to-day operations of the Business, such as, but not limited to, the
▇▇▇▇▇▇ Customer Briefing Center; and
(v) all leases and subleases for property located in Milpitas,
California.
2.3 Assumption of Liabilities. Subject to the terms and conditions set
forth herein, at the Closing, Buyer shall assume and agree to pay, honor,
perform and discharge when due all of the Liabilities and obligations relating
to the Transferred Assets (including the Transferred Subsidiaries) and the
Business (other than the Excluded Liabilities), including, without limitation,
the following:
(a) all Liabilities and obligations of the Business Entities arising
and to be performed from and after the Closing Date under or relating to
the Assumed Contract Obligations;
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(b) all Liabilities (other than Tax Liabilities and Retirement Plan
Accruals) and obligations of the Business Entities relating to or arising
out of the operation of the Business (i) as reflected in the Baseline
Financial Statements, (ii) as reflected in an identified reserve reflected
in the Baseline Financial Statements, or (iii) that arise in the ordinary
course of business between the date of the Baseline Financial Statements
and the Closing Date;
(c) all Liabilities and obligations relating to or arising out of the
conduct of the Business following the Closing Date;
(d) all warranty obligations of the Business Entities relating to (i)
products sold by the Business, whether before or after the Closing Date,
and (ii) the Assumed Contract Obligations;
(e) indebtedness related to the Transferred Facilities in Mountaintop,
Pennsylvania listed on Schedule 2.3 in the original principal amount of
$5,000,000;
(f) all Liabilities with respect to License Agreements assigned under
the terms of the License Assignment Agreement;
(g) all Liabilities related to foreign currency ▇▇▇▇▇▇ included in the
Transferred Assets;
(h) all Tax liabilities for foreign Taxes of Sellers that are foreign
entities of the type reflected in the Baseline Financial Statements and
also reflected on the Audited Closing Balance Sheet up to a maximum
aggregate liability of $3,600,000 (the "Assumed Pre-Closing Taxes");
(i) Liabilities for post-Closing performance of (excluding Liabilities
in the nature of indemnities for breaches of representations, warranties or
covenants) agreements entered into with the consent of Buyer, such consent
not to be unreasonably withheld, conditioned or delayed, in connection with
the disposition of the Sellers' Suppression Business and the Sellers'
Photomask Business;
(j) to the extent provided in Article 6, all Liabilities and
obligations of the Business Entities with respect to (i) severance payments
for Employees of the Business and (ii) accrued vacation of Employees of the
Business as reflected in the Final Closing Balance Sheet;
(k) reimbursement and similar obligations related to bonds or letters
of credit, if any, delivered in connection with the Transferred Facilities
or the conduct of the Business that will remain in effect following the
Closing Date in an aggregate amount not to exceed $2,000,000 (the
liabilities and obligations described in clauses (a) through (k) are
collectively referred to as the "Assumed Liabilities"); and
(l) all Liabilities with respect to European Severance Accruals.
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2.4 Excluded Liabilities. Buyer and Parent shall not assume or in any way
be responsible for, and the Sellers shall remain responsible for and shall pay,
the following debts, claims, commitments, liabilities and obligations of Sellers
and the Business (the "Excluded Liabilities"):
(a) (i) all Tax liabilities (including those of the Transferred
Subsidiaries and those arising from the transactions contemplated by
Sections 7.1(c), 3.12, and 10.20), including penalties and interest, in
respect of taxable years ending on or prior to the Closing Date or portions
thereof ending on or prior to the Closing Date, including Tax liabilities
associated with the consummation of the transactions contemplated by this
Master Agreement (including any liabilities associated with a Section
338(h)(10) Election, as defined in Section 3.3), but excluding the Assumed
Pre-Closing Taxes, Parent's and Buyer's share of Transfer Taxes (as defined
in Section 9.6), Taxes incurred as a result of transfers made pursuant to
Section 2.5 (other than Sellers' share of Transfer Taxes with respect
thereto, which shall be Excluded Liabilities), and Taxes incurred as a
result of transfers among Parent, Buyer and their Affiliates, and (ii) Tax
liabilities arising pursuant to Treasury Regulation 1.1502-6 or any similar
provision of foreign, state or local law;
(b) except as provided in Sections 2.3(e) and 2.3(k), indebtedness for
borrowed money or negative cash balances relating to the conduct of the
Business for all periods prior to the Closing Date including all debt
secured by mortgages or deeds of trust on the Owned Real Estate or on
Sellers' leasehold estates in the Leased Real Estate;
(c) Liabilities to the extent related to the Excluded Assets;
(d) intercompany payables and receivables arising from the conduct of
the Business prior to the Closing Date;
(e) the Retirement Plan Accruals and obligations under, or with
respect to, any Seller Benefit Plan or collective bargaining agreement,
except as specifically provided in Article 6, or except as accrued on the
Audited Closing Balance Sheet with respect to the period from July 3, 1999,
to the Closing Date as regards profit sharing contributions to be made to
the ▇▇▇▇▇▇ Corporation Union Retirement Plan or the ▇▇▇▇▇▇ Corporation
Retirement Plan;
(f) Liabilities arising out of any Business Entity's failure or
alleged failure to comply, prior to the Closing Date, with the rules and
regulations of any Governmental Authority;
(g) the Liabilities, if any, listed on Schedule 2.4;
(h) Environmental Liabilities to the extent not reflected in the
Baseline Financial Statements;
8
(i) Liabilities of any Business Entity or any of its Affiliates
(including, without limitation, any Environmental Liability) incurred by
any Business Entity or any of its Affiliates in connection with the conduct
of their businesses other than the Business;
(j) Liabilities of any Business Entity or any of its Affiliates (other
than obligations of Buyer or Parent under this Master Agreement, the
Ancillary Agreements and the Shareholders Agreement) arising under this
Master Agreement, the Ancillary Agreements or the Shareholders Agreement;
(k) Liabilities of any Business Entity or any of its Affiliates for
indemnification of, or advancement of expenses or payment of insurance
proceeds to, any present or former director or officer of (or other person
serving in a fiduciary capacity at the request of) any Business Entity or
any of its Affiliates based upon an actual or alleged breach of fiduciary
duty of such person prior to the Closing;
(l) Liabilities arising out of or relating to any business or product
line formerly owned or operated by any Business Entity or any predecessor
thereof but not currently so owned or operated, except for those referred
to in Section 2.3(i);
(m) Liabilities arising out of, or related to, any indemnification or
other provision under any contract or other agreement pursuant to which any
sale or disposition was made of any business or product line formerly owned
or operated by any Business Entity or any predecessor thereof but not
currently so owned or operated, except for those referred to in Section
2.3(i);
(n) Liabilities of any Seller or any of its Affiliates arising out of
matters occurring, or obligations incurred, after the Closing;
(o) Liabilities of any Business Entity for any professional, financial
advisory or consulting fees and expenses incident to or arising out of the
negotiation, preparation, approval or authorization of the Master
Agreement, the Ancillary Agreements and the transactions contemplated
hereby or thereby, or any other proposed transaction for the direct or
indirect sale of the Business or any portion thereof, including without
limitation, the fees, expenses and disbursements of Sellers' counsel and
accountants (including accountants fees, expenses and disbursements in
connection with the preparation of the Baseline Financial Statements);
(p) Liabilities of any Business Entity or any of its Affiliates
arising out of any Shared Contract;
(q) Liabilities of any Business Entity or any of its Affiliates
arising during or related to periods prior to the Closing Date to the
extent the amount of such liability or obligation is covered by a policy of
insurance or other indemnity agreement maintained by or for the benefit of
any Business Entity or any of its Affiliates, unless the rights under such
policy of insurance or indemnity agreement have been assigned to Buyer;
9
(r) Liabilities to which Buyer, any Transferred Assets or the Business
becomes subject that would not otherwise constitute an Assumed Liability
arising as a result of failure to comply with bulk sales laws or any
similar law;
(s) Taxes, expenses and any other Liabilities, if any, arising from
the transfers and transactions contemplated by Sections 7.1(c) and 9.12,
subject in the case of Section 9.12 to the use, in accordance with such
section, of proceeds, if any, from the disposition of the facility owned by
▇▇▇▇▇▇ Suzhou; and
(t) all Liabilities arising out of, resulting from or relating to
claims, whether founded upon negligence, strict liability in tort or other
similar legal theory (but not breach of warranty or infringement or breach
of Patents or Intangible Property Rights), seeking compensation or recovery
for or relating to injury to person or damage to property arising out of
the conduct of the Business prior to the Closing Date.
2.5 Election to Transfer Assets Using Subsidiary. Notwithstanding Section
2.1 hereof, Buyer may, at Buyer's election, require ▇▇▇▇▇▇, prior to the Closing
Date, and conditioned upon the occurrence of the transactions contemplated by
this Master Agreement, to transfer any or all of the Transferred Assets to a
corporation duly and properly incorporated by ▇▇▇▇▇▇ in the state of Delaware
(or in another state mutually satisfactory to the parties) at least 5 days
preceding the Closing Date, which corporation shall have only one class of stock
authorized, all the outstanding shares of which shall, at any time, have been
held solely by ▇▇▇▇▇▇, and which shall have no right, title or interest in or to
any assets, have assumed or become subject to any liabilities, or conducted any
business or operations (other than as is necessary to incorporate) prior to such
transfer. The stock of such corporation shall be a Transferred Asset, and such
corporation shall be a Transferred Subsidiary. At the election of Buyer, Buyer
and ▇▇▇▇▇▇ shall make an election under Section 338(h)(10) of the Code (and any
comparable election under any Tax law) with respect to such corporation in
accordance with the procedures set forth in Section 3.3.
2.6 Election to Transfer United Kingdom Assets. Sellers may elect, at their
sole discretion, to transfer the assets of ▇▇▇▇▇▇ Semiconductor Ltd. (UK) in
lieu of transferring the equity interest in such entity. In the event Sellers so
elect, Buyer shall designate the entity to which such assets shall be
transferred and an appropriate portion of the Purchase Price shall be allocated
to such assets.
ARTICLE 3
THE CLOSING
3.1 Place and Date. The closing of the sale and purchase of the Transferred
Assets (the "Closing") and the assumption of the Assumed Liabilities shall take
place at 10:00 A.M. local time not later than the second Business Day following
the satisfaction or waiver of the conditions referred to in Articles 10 and 11
at the offices of Dechert Price & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇, or
such other place upon which the parties may agree. The day on which the Closing
actually occurs is sometimes referred to herein as the "Closing Date."
10
3.2 Purchase Price. On the terms and subject to the conditions set forth in
this Master Agreement, upon the Closing, Parent and Buyer shall pay an aggregate
consideration to ▇▇▇▇▇▇, or another Seller as directed by ▇▇▇▇▇▇, of U.S.
$610,000,000 (as adjusted pursuant to Section 3.6, the "Purchase Price"), in the
following manner:
(a) Parent shall pay to ▇▇▇▇▇▇ U.S. $90,000,000 by a subordinated
promissory note of Parent substantially in the form attached hereto as Exhibit I
(the "Note"), and, if the value of the property transferred to Parent shall
exceed $90,000,000 (with such excess value being called the "Excess Value"),
then Parent shall pay to ▇▇▇▇▇▇ U.S. dollars in an amount equal to the Excess
Value by wire transfer of immediately available funds to an account, or
accounts, designated by ▇▇▇▇▇▇; and
(b) Buyer shall pay U.S. dollars in an aggregate amount equal to
$520,000,000 less the Excess Value, if any, to ▇▇▇▇▇▇ and the other Sellers, as
directed by ▇▇▇▇▇▇, which amount shall be paid by wire transfer of immediately
available funds to an account or accounts designated by ▇▇▇▇▇▇.
3.3 Allocation of Purchase Price; Section 338(h)(10) Elections.
(a) The parties shall allocate the aggregate consideration received by
Sellers with respect to the Transferred Assets other than the Transferred
Subsidiaries for which a Section 338(h)(10) Election (as defined in Section
3.3(b) is made (each, an "Elected Subsidiary"), in accordance with Section 1060
of the Code, as mutually agreed to by the parties pursuant to the procedure
described below. The parties shall allocate the consideration received by
Sellers with respect to each Elected Subsidiary among the assets of such
subsidiary in accordance with Section 338(h)(10) of the Code and the Treasury
Regulations promulgated thereunder, as mutually agreed to by the parties
pursuant to the procedure described below. Subject to the requirements of any
applicable Tax law or election, all such mutually agreed-to allocations shall be
used by each party in preparing any filings required pursuant to Section 1060 or
Section 338(h)(10) of the Code or any similar provisions of state or local law
and all relevant Income Tax Returns. Neither Buyer, Parent nor Sellers will take
any position before any taxing authority or in any judicial proceeding with
respect to Income Taxes or other Taxes that is inconsistent with such mutually
agreed-to allocations without the prior written consent of the other party,
which consent shall not unreasonably be withheld. The parties shall exercise
commercially reasonable efforts to support such mutually agreed-to reported
allocations in any audit proceedings initiated by any taxing authority;
provided, however, that none of Sellers shall have any obligation to incur
unreasonable or extraordinary out-of-pocket expenses.
(b) At the election of Buyer (or, if relevant, Parent), Buyer (or, if
relevant, Parent) and Sellers shall make an election under Section 338(h)(10) of
the Code (and any comparable election under any Tax law) for any or all of the
Transferred Subsidiaries for which such election is permissible (a "Section
338(h)(10) Election"). If any Section 338(h)(10) Election is made, Buyer (or, if
relevant, Parent) and Sellers shall jointly execute IRS Form 8023 and all
attachments required to be filed therewith as well as any other forms required
to be executed pursuant to any Tax law.
11
(c) With respect to the Transferred Assets other than the Elected
Subsidiaries, Buyer, Parent and Sellers shall report the consideration allocated
to such assets on IRS Form 8594 and all attachments required to be filed
therewith as well as on any other forms required to be executed pursuant to any
Tax law.
(d) Buyer and Parent, no later than 150 days after the Closing Date,
shall deliver to ▇▇▇▇▇▇ a statement reflecting (i) with respect to each Elected
Subsidiary, a proposed determination of the "MADSP" (as determined in accordance
with Treasury Regulation Section 1.338(h)(10)-1(f)) for the assets of such
subsidiary and a proposed allocation of such MADSP among such assets and (ii)
with respect to all other Transferred Assets, a proposed allocation of the
consideration received therefor (the "Allocation Statement"). If a Section
338(h)(10) Election is not made for a Transferred Subsidiary, the Allocation
Statement shall provide an allocation of a portion of the consideration to the
stock of such subsidiary. Within 30 days after receipt of the Allocation
Statement, ▇▇▇▇▇▇ shall deliver to Buyer and Parent a statement of proposed
changes with respect to such Allocation Statement (the "Statement of Changes").
If ▇▇▇▇▇▇ shall fail to deliver a Statement of Changes within such 30-day
period, ▇▇▇▇▇▇ shall be deemed to have accepted the Allocation Statement. If
▇▇▇▇▇▇ delivers a Statement of Changes, Buyer, Parent and ▇▇▇▇▇▇ shall attempt
in good faith to accommodate such changes, but if they are unable to do so
within 15 days after Buyer and Parent's receipt of the Statement of Changes,
final determination of the amounts set forth on the Allocation Statement shall
be made by the Independent Accounting Firm whose costs shall be borne 50% by
Buyer and Parent and 50% by ▇▇▇▇▇▇.
3.4 Deliveries. At the Closing, (a) Buyer shall deliver to, or as directed
by, ▇▇▇▇▇▇ the Purchase Price and the agreements, instruments of assumption,
opinions, certificates and other documents required to be delivered by Buyer or
Parent pursuant to Article 11 and (b) Sellers shall deliver to Buyer the
agreements, instruments of transfer, opinions, certificates and other documents
required to be delivered by Sellers pursuant to Article 10 and possession of (i)
all of the Real Estate except the Retained Leased Real Estate and (ii) the
Subleased Real Estate.
3.5 Closing Balance Sheet.
(a) At least five Business Days prior to the Closing, ▇▇▇▇▇▇ shall
prepare in good faith and deliver to Buyer an estimated unaudited balance sheet
(the "Estimated Closing Balance Sheet") of the Business as of the Closing Date
setting forth the Estimated Working Capital of the Business as of the Closing
Date, together with (i) a statement of the calculations and supporting detail of
Estimated Working Capital and (ii) a certificate signed by ▇▇▇▇▇▇ to the effect
that the Estimated Working Capital was determined in accordance herewith. Buyer
shall have the right to review any work papers relating to the Estimated Closing
Balance Sheet. The Estimated Closing Balance Sheet shall be prepared in a manner
consistent with the Baseline Financial Statements and the terms of this Master
Agreement and shall reflect ▇▇▇▇▇▇'▇ best estimate of the Transferred Assets,
Assumed Contract Obligations and other Assumed Liabilities as of the Closing
Date.
(b) In the event that the amount of Estimated Working Capital of the
Business as reflected on the Estimated Closing Balance Sheet is either less or
more than $189,900,000, then the amount of the cash portion of the Purchase
Price payable under Section 3.2(b) shall be
12
reduced or increased, as the case may be, by an amount equal to such difference.
Any adjustment to the Purchase Price made under this Section 3.5, or under
Section 3.6, or otherwise made under this Master Agreement shall first be
applied against the portion of the Purchase Price paid by the Buyer, with any
excess being applied against the portion paid by Parent.
(c) ▇▇▇▇▇▇ shall cause the cash portion of the Estimated Closing
Balance Sheet to be not less than $2,000,000, not including any cash in the
possession of any of the Transferred Subsidiaries as of the Closing Date.
3.6 Post-Closing Purchase Price Adjustment.
(a) As promptly as practicable, but in no event later than 60 days
following the Closing Date, Buyer shall cause to be prepared and delivered to
▇▇▇▇▇▇ (i) an audited balance sheet of the Business as of the Closing Date (the
"Audited Closing Balance Sheet"), together with an audit report thereon by Ernst
& Young LLP, or another national accounting firm selected by the Buyer (the
"Buyer accountants"), prepared in accordance with GAAP, and (ii) a statement
based on such Audited Closing Balance Sheet setting forth in detail a
calculation of the Closing Date Working Capital. For purposes of this Agreement,
"Estimated Working Capital" and "Closing Date Working Capital" shall mean an
amount equal to (i) all accounts receivable plus inventory plus prepaid assets
plus the assets described in Section 2.1(w) plus, in the case of the calculation
of the Closing Date Working Capital, the assets described in Section 2.1(u), as
such constitute Transferred Assets, minus (ii) accounts payable and accrued
liabilities (other than accrued Tax Liabilities, the Retirement Plan Accruals
and any European Severance Accruals) including the liabilities referred to in
Sections 6.3(k) and 6.4, as such constitute Assumed Liabilities, in each case as
are accrued and reflected on the Estimated Closing Balance Sheet and the Audited
Closing Balance Sheet, respectively. Except as set forth below in this Section
3.6(a), the Audited Closing Balance Sheet shall be deemed to be and shall be
final, binding and conclusive on the parties hereto. The Audited Closing Balance
Sheet shall be deemed final for the purposes of this Section 3.6(a) upon the
earlier of (i) the failure of ▇▇▇▇▇▇ to notify Buyer of a dispute within 30 days
of the delivery of the Audited Closing Balance Sheet to ▇▇▇▇▇▇, (ii) the
resolution of all disputes, pursuant to Section 3.6(b), by ▇▇▇▇▇▇' accountants
and Buyer's accountants, and (iii) the resolution of all disputes, pursuant to
Section 3.6(b), by the Independent Accounting Firm.
(b) ▇▇▇▇▇▇ may dispute any amounts reflected on the Audited Closing
Balance Sheet delivered pursuant to Section 3.6(a), to the extent the net effect
of such disputed amounts would affect the Closing Date Working Capital reflected
on the Audited Closing Balance Sheet by more than $1,000,000, but only on the
basis that the amounts reflected on such statement are incorrect or were not
arrived at in accordance with GAAP consistently applied. In the event of such a
dispute, Buyer's accountants and ▇▇▇▇▇▇'▇ accountants shall attempt to reconcile
their differences, and any resolution by them as to any disputed amounts shall
be final, binding and conclusive on the parties hereto. If Buyer's accountants
and ▇▇▇▇▇▇'▇ accountants are unable to reach a resolution within 60 days after
the delivery of the Audited Closing Balance Sheet, Buyer's accountants and
▇▇▇▇▇▇'▇ accountants shall submit the items remaining in dispute for resolution
to an independent accounting firm of international reputation mutually
acceptable to Buyer and ▇▇▇▇▇▇ (the "Independent Accounting Firm"), which shall,
within 30 days after such submission, determine and report to Buyer and ▇▇▇▇▇▇
upon such remaining disputed items, and
13
such report shall be final, binding and conclusive on Buyer and ▇▇▇▇▇▇. The
balance sheet resulting from that report shall be the Audited Closing Balance
Sheet. The fees and disbursements of the Independent Accounting Firm shall be
allocated between Buyer and ▇▇▇▇▇▇ in the same proportion that the aggregate
amount of such remaining disputed items so submitted to the Independent
Accounting Firm that is unsuccessfully disputed by each such party as finally
determined by the Independent Accounting Firm bears to the total amount of such
remaining disputed items.
(c) The Purchase Price adjustment shall be an amount equal to the
Closing Date Working Capital minus the Estimated Working Capital. If the result
is a positive number in excess of $1,000,000, then the Purchase Price determined
pursuant to Section 3.5(b) shall be adjusted upward in an amount equal to the
result obtained under this Section 3.6(c), and such amount shall be paid in cash
by wire transfer of immediately available funds by Buyer to ▇▇▇▇▇▇ as soon as
practicable (but in no event more than 10 days) after such determination. If the
result obtained in this Section 3.6(c) is a negative number in excess of
$1,000,000, then the Purchase Price determined pursuant to Section 3.5(b) shall
be adjusted downward in an amount equal to the result obtained under this
Section 3.6(c), and such amount shall be paid by wire transfer of immediately
available funds by ▇▇▇▇▇▇ to Buyer as soon as practicable (but in no event more
than 10 days) after such determination.
3.7 Limitations. To the extent that a Liability is reflected on the Audited
Closing Balance Sheet, Buyer shall not have the right to also recover under a
claim for indemnification for such Liability pursuant to Article 9 or Article 13
hereof.
3.8 Consent of Third Parties; Further Assurances.
(a) From time to time following the Closing, Sellers shall execute and
deliver, or cause to be executed and delivered, to Buyer such additional
instruments of conveyance and transfer as Buyer may reasonably request or as may
be otherwise reasonably necessary to more effectively convey or transfer to, and
vest in, Buyer and put Buyer in possession of, any part of the Transferred
Assets. Nothing in this Master Agreement shall be construed as an attempt or
agreement to assign any asset, contract, lease, permit, license or other right
which would otherwise be included in the Transferred Assets but which is by its
terms or by law nonassignable without the consent of the other party or parties
thereto or any Governmental Authority unless such consent shall have been given,
or as to which all the remedies for the enforcement thereof enjoyed by Sellers,
any other Business Entity or the Business would not, as a matter of law, pass to
Buyer as an incident of the assignments provided for by this Agreement (the
"Non-Assignable Assets"). Sellers shall use their Best Efforts to obtain such
consent promptly. At such time as any Non-Assignable Assets is properly assigned
to Buyer, such Non-Assignable Asset shall become a Transferred Asset. Following
the Closing and until such time as such Non-Assignable Assets may be properly
assigned to Buyer, such Non-Assignable Assets shall be held by Sellers in trust
for Buyer and the covenants and obligations thereunder shall be performed by
Buyer in the name of Sellers and all benefits and obligations existing
thereunder shall be for the account of Buyer. During such period, Sellers shall
take or cause to be taken such action in its name or otherwise as Buyer may
reasonably request, at Buyer's expense, so as to provide Buyer with the benefits
of the Non-Assignable Assets and to effect collection of money or other
consideration to become due and payable under the Non-Assignable Assets and
Sellers shall promptly pay over to Buyer all money or other consideration
14
received by them (or their Affiliates) in respect of all Non-Assignable Assets.
Following the Closing, Sellers authorize Buyer, to the extent permitted by
Applicable Law and the terms of the Non-Assignable Assets, at Buyer's expense,
to perform all of the obligations and receive all of the benefits under the
Non-Assignable Assets and appoints Buyer their attorney-in-fact to act in their
name on its behalf (and on behalf of its Affiliates) with respect thereto.
(b) Notwithstanding anything in this Master Agreement to the contrary,
this Master Agreement shall not constitute an agreement by Sellers to assign or
delegate, or by Buyer to assume and agree to pay, perform or otherwise
discharge, any Non-Assignable Asset if an attempted assignment, delegation or
assumption thereof without the consent of a third Person (including, without
limitation, any Governmental Authority) thereto would constitute a breach
thereof unless and until such consent is obtained.
(c) Except as set forth in Section 3.8(a), Section 3.9 or as provided
in the Transition Services Agreement, to the extent reasonably practicable, the
Sellers shall perform all obligations and be entitled to all the benefits under
the Non-Assignable Assets; provided, however, that Sellers shall be liable for
the failure to perform any such obligation.
3.9 Shared Contracts. Subject to the terms of the Transition Services
Agreement, to the extent any Contracts relate both to the Business and to other
businesses of the Sellers ("Shared Contracts"), such Shared Contracts shall not
be assigned to Buyer. At Buyer's request, with respect to any Shared Contract,
the Sellers shall use Best Efforts to obtain the agreement of the other party or
parties to any Shared Contract to enter into a separate agreement with Buyer
with respect to the matters covered by such Shared Contract that relate to the
Business. Buyer shall be responsible for fulfilling the obligations under the
Shared Contracts related to or arising from benefits received by Buyer pursuant
to the Shared Contracts as contemplated by the Transition Services Agreement.
3.10 Apportionment at Closing Date; Customer Billing.
(a) At the Closing, the parties shall make, without duplication of
adjustments reflected in the Audited Closing Balance Sheet, customary closing
adjustments with respect to the conveyance of the Transferred Facilities as of
the Closing Date and the usual adjustments relating to the Business as of the
Closing Date, including prepaid lease payments, security deposits, rents, real
estate taxes, local improvements charges, assessments (special and ordinary),
sewer impost charges, utility charges, water rents, monthly maintenance charges,
rebates and royalties, deposits and prepaid expenses with any public utility or
any municipal, governmental or other public authority, wages and any other
ongoing charges, and all such payments, taxes and charges shall be apportioned
and adjusted as of the Closing Date, and at the Closing the net amount thereof
shall be pro rata paid by ▇▇▇▇▇▇ to Buyer or paid by Buyer to ▇▇▇▇▇▇, as the
case may be. Any such apportionments and adjustments shall be subject to
correction for any errors or omissions that subsequently may be discovered
provided that the party discovering such error or omission provides written
notice of same to the other party. Such other party shall, within 15 days after
receipt of such notice, reimburse the party delivering such notice for the full
amount of such error or omission.
(b) In the event that ▇▇▇▇▇▇ or any of its Affiliates receives payment
after the Closing Date on invoices issued by Buyer relating to products sold or
services rendered on or after
15
the Closing Date, ▇▇▇▇▇▇ will promptly notify Buyer of such receipt and will
promptly remit, or will cause such Affiliate to promptly remit, such payment to
Buyer. In the event that Buyer or any Affiliate of Buyer receives payment after
the Closing Date on invoices issued by ▇▇▇▇▇▇ or any of its Affiliates relating
to products sold or services rendered prior to the Closing Date that have given
rise to accounts receivable that are included in the Excluded Assets, Buyer will
promptly notify ▇▇▇▇▇▇ of such receipt and will promptly remit, or will cause
such Affiliate to promptly remit, such payment to ▇▇▇▇▇▇.
3.11. Warranty Claims. Except as expressly provided in Sections 2.3 and 2.4
and this Section 3.11, all of the obligations and liabilities of the Business
Entities with respect to any Products transferred to Buyer as part of the
Transferred Assets which are shipped or provided by Buyer on or after the
Closing shall be for the account of, and exclusively the obligation of Buyer.
Buyer shall assume the obligation to satisfy all warranty claims or liabilities
with respect to any products or services shipped or provided by the Business
Entities prior to the Closing.
3.12 Purchase Agreement for ▇▇▇▇▇▇ Malaysia. On or prior to the Closing
Date, at ▇▇▇▇▇▇' request, Buyer will, or will cause a Subsidiary, to enter into
a separate Purchase Agreement (the "Malaysian Purchase Agreement") with HAS and
HSSM to purchase the stock of ▇▇▇▇▇▇ Malaysia on terms mutually acceptable to
Buyer, HAS and HSSM. The closing date for such purchase shall be the Closing
Date, or such other date as the parties shall agree. The purchase price for the
stock of ▇▇▇▇▇▇ Malaysia shall be paid in cash to HAS and HSSM and shall reduce
the cash portion of the Purchase Price to be paid to ▇▇▇▇▇▇ pursuant to Section
3.2.
3.13 Deferred Closing. The parties expect that the shares of ▇▇▇▇▇▇
Semiconductor (Taiwan) Ltd. and ▇▇▇▇▇▇ Semiconductor Y.H. (Korea) and the assets
of ▇▇▇▇▇▇ Semiconductor GmbH, the assets of ▇▇▇▇▇▇ ▇.▇. (Belgium), and the
assets of ▇▇▇▇▇▇ Semiconductor Design & Sales Pte. Ltd. (Singapore) may be
Non-Assignable Assets, as defined in Section 3.8, as of the Closing Date.
Sellers and Buyer shall, on the Closing Date, execute a deferred closing
agreement with respect to such assets containing provisions substantially the
same as Section 3.8, except that such agreement shall contain an absolute
obligation to complete the transfer of the shares of ▇▇▇▇▇▇ Semiconductor
(Taiwan) Ltd., the shares of ▇▇▇▇▇▇ Semiconductor Y.H. (Korea), the assets of
▇▇▇▇▇▇ Semiconductor GmbH (Germany), the assets of ▇▇▇▇▇▇ ▇.▇. (Belgium) and the
assets of ▇▇▇▇▇▇ Semiconductor Design and Sales Pte. Ltd. (Singapore), within
180 days of the Closing Date (each such closing a "Deferred Closing" and
collectively, the "Deferred Closings"). The Non-Assignable Assets shall be
considered Transferred Assets for purpose of calculating the Estimated Closing
Balance Sheet and the Audited Closing Balance Sheet. No adjustment shall be made
to the Purchase Price as a result of such assets being Non-Assignable Assets.
3.14 Environmental Consents. To the extent that environmental permits are
not obtained by the Closing Date, the parties agree to use Best Efforts to
obtain the transfer of such permits as promptly as possible following the
Closing Date.
3.15 Pennsylvania Indebtedness. To the extent the indebtedness listed on
Schedule 2.3 is unable to be transferred to Buyer because the holder of such
debt does not consent to such transfer or because the merger of ▇▇▇▇▇▇
Semiconductor (Pennsylvania), Inc. into
16
a limited liability company was a breach of one or more of such loans, ▇▇▇▇▇▇
shall repay the debt in full, and Buyer shall enter into a loan agreement, or
agreements, with ▇▇▇▇▇▇ on substantially the same terms and security as the
indebtedness which could not be so transferred, provided that, Buyer shall repay
to ▇▇▇▇▇▇ the outstanding balance of such loans (the "Replacement Loans") at the
time the outstanding principal balance of the Note is repaid if, and only if,
the bonds issued by Buyer on the Closing Date have been repaid, and provided
further, if the due dates of such bonds are extended, the Buyer shall cause the
terms governing such bonds to be modified to permit the repayment of the
Replacement Loans at the time the Note is paid.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇
Except as set forth in the Disclosure Schedule delivered to Buyer
contemporaneously herewith (the "Disclosure Schedule"), of which the Schedules
referred to below are a part, and in the documents and other materials
identified in the Disclosure Schedule, and subject to the limitations contained
in Article 13, ▇▇▇▇▇▇ represents and warrants to Buyer as set forth below as of
the date of this Master Agreement. This Article 4 does not apply to Transferred
Assets conveyed to Buyer through the IP Transfer Agreements, which include the
only representations and warranties of ▇▇▇▇▇▇ made with respect to such assets.
4.1 Organization, Standing, Etc. of Business Entities. Each Business Entity
(other than ▇▇▇▇▇▇ Semiconductor, LLC, ▇▇▇▇▇▇ Semiconductor (Ohio), LLC, and
▇▇▇▇▇▇ Semiconductor (Pennsylvania), LLC) is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction where
it is organized and has all requisite corporate power and authority to carry on
the Business as currently conducted by it and to own or lease and to operate the
properties of the Business used by it. Each Business Entity (other than ▇▇▇▇▇▇
Semiconductor, LLC, ▇▇▇▇▇▇ Semiconductor (Ohio), LLC, and ▇▇▇▇▇▇ Semiconductor
(Pennsylvania), LLC) is qualified to do business and is in good standing in each
state of the United States in which the Business is conducted that requires such
qualification and where the failure to so qualify would have a Material Adverse
Effect on the Business. For the purposes of the Transaction Documents, a
"Material Adverse Effect on the Business" means any material adverse change in,
or material adverse effect on, the assets, liabilities, business or operations
of the Transferred Assets or the Business taken as a whole.
4.2 Corporate Authorization; Enforceability.
(a) The execution, delivery and performance of this Master Agreement
and all other documents executed or to be executed pursuant to this Master
Agreement by any Seller, and the consummation of the transactions contemplated
hereby and thereby, have, or prior to the Closing will have, been duly
authorized by all necessary corporate action on the part of each Seller. This
Master Agreement and the Ancillary Agreements executed or to be executed by a
Seller have been, or will have been, at the time of their respective executions
and deliveries, duly executed and delivered by a duly authorized officer of each
such Seller.
(b) This Master Agreement and each Ancillary Agreement executed or to
be executed by a Seller constitutes, or at the time executed by a Seller will
constitute, the valid and
17
legally binding obligation of each Seller, enforceable in accordance with its
terms, except as such enforceability may be limited by equitable principles and
by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
similar laws relating to or affecting the rights of creditors generally.
4.3 Charters and Bylaws; Capitalization of Transferred Subsidiaries. Copies
of the charters and bylaws and other organizational documents of the Business
Entities have been made previously available to Buyer, and each such copy is
true, correct and complete. Schedule 4.3 sets forth the authorized and
outstanding capital stock of the Transferred Subsidiaries. Except as set forth
on Schedule 4.3, none of the Transferred Subsidiaries has any outstanding
securities convertible into or exercisable for any shares of its capital stock,
nor does it have any outstanding rights to subscribe for or to purchase, or any
options for the purchase, or any arrangements providing for the issuance
(contingent or otherwise), of, or any calls against, commitments by or claims
against it of any character relating to, any shares of its capital stock or any
securities convertible into or exchangeable or exercisable for any shares of its
capital stock.
4.4 No Violations. The execution, delivery and performance of this Master
Agreement and the Ancillary Agreements executed or to be executed by Sellers,
and the consummation of the transactions contemplated hereby and thereby, will
not cause or result in any violation of or default under any provision (a) of
the charter or bylaws of any Business Entity, (b) except as set forth on
Schedule 4.4, of any mortgage, indenture, trust, lease, partnership or other
agreement or other instrument, permit, concession, grant, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to any Seller or the Business, the result of which, with respect to items
identified in clause (b), would (either individually or in the aggregate) have a
Material Adverse Effect on the Business or would have a Material Real Estate
Impairment.
4.5 Governmental Authorizations and Consents. Except as set forth on
Schedule 4.5, no consents, licenses, approvals or authorizations of, or
registrations or declarations with, any Governmental Authority are required to
be obtained or made by any Business Entity in connection with the execution,
delivery, performance, validity and enforceability of this Master Agreement or
any Ancillary Agreement, other than (a) a filing with the Federal Trade
Commission and the Department of Justice under the HSR Act, (b) if required, a
filing with the Committee on Foreign Investment in the United States under
Section 721 of Title VII of the United States Defense Production Act of 1950, as
amended by Section 5021 of the Omnibus Trade and Competitiveness Act of 1988,
and (c) other consents, licenses, approvals, authorizations, registrations or
declarations, where the failure to obtain such would not have a Material Adverse
Effect on the Business and would not cause a Material Real Estate Impairment.
4.6 Compliance with Other Instruments and Laws. No Business Entity is in
violation of any term of its charter or bylaws or other charter documents or,
except as set forth on Schedule 4.6, any mortgage, indenture, instrument or
agreement relating to indebtedness for borrowed money or of any judgment, decree
or order which names such Business Entity, or of any term of any other Assumed
Contract Obligation which is among the Transferred Assets, which violation,
either individually or when aggregated with all other such violations, would
have a Material Adverse Effect on the Business or would have a Material Real
Estate
18
Impairment. To Sellers' Knowledge, no Business Entity is in violation of any
Applicable Law applicable to the Business or any of the Transferred Assets,
which violation, either individually or when aggregated with all other such
violations, would have a Material Adverse Effect on the Business or would have a
Material Real Estate Impairment. This Section 4.6 does not apply to
Environmental Laws.
4.7 Baseline Financial Statements. ▇▇▇▇▇▇ has delivered to Buyer the
statement of the Transferred Assets and Assumed Liabilities and the related
statement of income of the Business (other than Excluded Assets) for the nine
months ended April 2, 1999 (the "Financial Statements Date") (such statements,
including the notes thereto, hereinafter being referred to as the "Baseline
Financial Statements"). The Baseline Financial Statements are included in
Schedule 4.7 and have been prepared in accordance with the accounting records
and policies of ▇▇▇▇▇▇ and with GAAP and present fairly in all material respects
the Transferred Assets and the Assumed Liabilities of the Business as of the
dates thereof and the results of its operations for the period then ended,
except (a) as set forth on Schedule 4.7 and (b) that the Baseline Financial
Statements do not contain all footnote disclosures required by GAAP. During the
last five fiscal years ended July 2, 1998, there has not been any material
change in the method of accounting or keeping of books of account or accounting
practices with respect to the Business, except as (i) required by GAAP or (ii)
described in ▇▇▇▇▇▇' annual reports on Form 10-K or 10-K/A for the five fiscal
years ended July 2, 1998 as filed with the Securities and Exchange Commission.
4.8 Absence of Certain Changes or Events. Except as set forth on Schedule
4.8 as of the date of this Master Agreement, since the Financial Statements
Date, and except for activities related to the transactions contemplated by this
Master Agreement, each Business Entity has conducted its operations related to
the Business in the ordinary course of business, and neither the Business nor
the Transferred Assets have suffered a Material Adverse Effect on the Business
or a Material Real Estate Impairment. Without limiting the generality of the
foregoing, except as set forth on Schedule 4.8, since the Financial Statements
Date in each case as related to the Business:
(a) no Business Entity has or has entered into any agreement to sell,
lease, transfer, mortgage or assign or subject to any lien any of the
Transferred Assets, tangible or intangible, other than in the ordinary
course of business;
(b) no party (including any Business Entity) has, other than in the
ordinary course of business, accelerated, terminated, materially modified,
or canceled any contract, lease, sublease, license, or sublicense (or
series of related contracts, leases, subleases, licenses, and sublicenses),
involving more than $125,000 to which any Business Entity is a party or by
which the Transferred Assets are bound;
(c) no Business Entity has made any commitment for any capital
expenditure (or series of related capital expenditures) outside the
ordinary course of business for an amount that exceeds $250,000;
19
(d) no Business Entity has made any capital investment in, any loan
to, or any acquisition of the securities or assets of any other Person
other than in the ordinary course of business;
(e) no Business Entity has canceled, compromised, knowingly waived or
released any material right or claim (or series of related rights and
claims) under Material Contracts, outside the ordinary course of business;
(f) no Business Entity has incurred, assumed, guaranteed or discharged
any obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due, or any indebtedness for borrowed money,
except current liabilities for trade or business obligations incurred in
connection with the purchase of goods or services in the ordinary course of
business consistent with prior practice;
(g) no Business Entity has received any notice of termination of any
Material Contract or any work order thereunder, lease or other agreement
which in any case or in the aggregate would reasonably be expected to have
a Material Adverse Effect on the Business, and there has not been any
change or, to the Sellers' Knowledge, any threat of any change in any
relation with, or any loss or, to the Sellers' Knowledge, threat of loss
of, any of the suppliers, distributors or customers of the Business which,
individually or in the aggregate, has had or reasonably could be expected
to have a Material Adverse Effect on the Business;
(h) no Business Entity has suffered any damage to or destruction or
loss of any tangible assets (whether or not covered by insurance), in any
case or in the aggregate, in excess of $150,000;
(i) no Business Entity has made any material change in the rate of
compensation, commission, bonus or other direct or indirect remuneration
payable, or agreed to pay, conditionally or otherwise, any material bonus,
incentive, retention or other compensation, retirement, welfare, fringe or
severance benefit or vacation pay, to or in respect of any Employee of the
Business, other than increases and payments in the ordinary course of
business consistent with past practice in the compensation payable to
Employees of the Business;
(j) no Business Entity has encountered any labor union organizing
activity or had any actual or overtly threatened employee strikes, work
stoppages, slowdowns or lockouts and has not entered into any material
agreement or material negotiation with any labor union or other collective
bargaining representative of any Employee of the Business; and
(k) no Business Entity has made a change in accounting method, keeping
of books of account or accounting practices, nor has any Business Entity
made any election for Tax purposes or for purposes of a Tax Return (or had
any such election made on its behalf) except as set forth in Sections 4.22
and 10.20, or entered into any agreement, arrangement or settlement with
respect to Taxes.
20
4.9 Title to Transferred Assets.
(a) Personal Property. Except as set forth on Schedule 4.9(a), and
except for personal property subject to valid leases, each Business Entity has
good title to or other valid ownership rights in the Transferred Assets. Except
as set forth on Schedule 4.9(a), and except for personal property subject to
valid leases, the Transferred Assets are owned free and clear of all material
Liens except for Permitted Liens. This Subsection 4.9(a) does not apply to Real
Estate.
(b) Real Estate.
1. Owned Real Estate.
(i) Schedule 4.9(b) sets forth a list of all of the real estate
owned by any one or more of the Business Entities and used primarily in the
Business (such real estate, together with all beneficial, appurtenant easements
and other appurtenances thereto and with all buildings, structures and other
improvements thereon and all fixtures attached thereto or forming a part
thereof, is collectively referred to herein as the "Owned Real Estate"), and
includes the street address of each parcel of the Owned Real Estate. Except as
set forth on Schedule 4.9(b) and subject to any lease or other written agreement
executed prior to Closing pursuant to Section 8.4, each Business Entity has
good, valid, marketable and indefeasible fee simple title to, and is in actual,
exclusive possession of, its respective Owned Real Estate. The Sellers have
made, or at the request of Buyer will make prior to Closing, available to Buyer
true, correct and complete copies of all (i) legal descriptions, (ii) title
reports, title insurance policies and commitments therefor, (iii) surveys, (iv)
licenses, certificates of occupancy, plans, specifications and permits,
pertaining to the Owned Real Estate that are in the possession or control of any
of the Business Entities.
(ii) The Owned Real Estate is free and clear of all Liens except
for Permitted Liens.
(iii) To the Sellers' Knowledge, no portion of any of the Owned
Real Estate is subject to a special ad valorem tax valuation or rate that will
be lost as a result of the transfer to Buyer pursuant to the provisions hereof.
(iv) The Owned Real Estate and the use thereof by the Business
Entities in connection with the Business as currently used and consistent with
past practice complies, in all material respects, with all covenants, easements
and restrictions of record affecting the Owned Real Estate.
(v) All construction of the facilities and improvements located
in Mountaintop, PA have been completed to the reasonable satisfaction of the
Business Entities in accordance with the appropriate construction contracts, and
there is not currently any ongoing construction at any of the Owned Real Estate
other than ordinary course maintenance and repair and to Sellers' Knowledge no
Business Entity has any claim for any construction defect.
21
2. Leased Real Estate.
(i) Schedule 4.9(b) sets forth a list of all of the leases or rights
of occupancy pursuant to which any Business Entity leases or subleases any real
property or interest therein related to or used primarily in the Business
(collectively, as heretofore modified, amended or extended, the "Leases"),
including the identification of each of the lessors thereof and the street
addresses of all of the real estate demised under each of the Leases
(collectively, the "Leased Real Estate"). One or more of the Business Entities
is the lessee under all Leases, and no party other than one or more of the
Business Entities has any right to possession, occupancy or use of any of the
Leased Real Estate. True and correct copies of (i) leasehold title insurance
policies and commitments therefor, title reports, surveys, licenses,
certificates of occupancy, plans, specifications, permits and other documents,
pertaining to the Leased Real Estate that are in the possession or control of
any of the Business Entities, and (ii) each of the Leases, including all
amendments, modifications and extensions, and together with all subordination,
non-disturbance and/or attornment agreements related thereto have been, or at
the request of Buyer will be prior to Closing, made available by the Business
Entities to Buyer. Each of the Leases is valid and in full force and effect and
is binding and enforceable in accordance with its terms. Except as set forth on
Schedule 4.9(b), none of the Sellers has received any written notice of default
under any provision of any of the Leases. Except as set forth on Schedule
4.9(b), to the Sellers' Knowledge, none of the Business Entities and none of the
lessors under any of the Leases is in material default under any of the Leases
and no event has occurred that with notice, the passage of time or both would
constitute such a default.
(ii) Except as set forth in Schedule 4.9(b), the Business Entities
are in actual, exclusive possession of the Leased Real Estate. The Business
Entities have good, valid and indefeasible title to all the leasehold estates
conveyed under the Leases free and clear of all Liens, except Permitted Liens.
(iii) Except as set forth in Schedule 4.9(b), the basic rent, all
additional rent and all other charges and amounts payable under the Leases by
the lessee thereunder have been paid to date. All work required to be performed
under the Leases by the lessors thereunder or by any of the Business Entities
has been performed in all material respects, and, to the extent that any of the
Business Entities is responsible for payment of such work, has been fully paid
for, whether directly to the contractor performing such work or to such lessor
as reimbursement therefor, except for items (i) which any of the Sellers is
disputing in good faith by appropriate action, and (ii) are not reasonably
expected to have a Material Adverse Effect on the Business or cause a Material
Real Estate Impairment.
(iv) Except as set forth on Schedule 4.9(b) or reflected in the
Baseline Financial Statements, there are no brokerage commissions or finder's
fees due from any of the Business Entities which are unpaid with regard to any
of the Leases or the Leased Real Estate, or which will become due at any time in
the future with regard to the Leases or the Leased Real Estate, including with
respect to the Existing Subleases.
(v) Except as set forth on Schedule 4.9(b), there have been no acts
of God, forces of nature, or other casualties which could result in the
termination of any of the Leases.
22
(vi) Except as set forth on Schedule 4.9(b): (i) no consent of any of
the lessors under any of the Leases is required by reason of any of the
transactions contemplated by this Master Agreement; and (ii) none of the rights
of any of the Business Entities under any of the Leases will be impaired by the
consummation of the transactions contemplated by this Master Agreement and all
of such rights (other than those under the Retained Leases) and all of Buyer's
rights under the Subleases will be enforceable by the Buyer after the Closing
Date, to the same degree as by the Sellers prior to the Closing Date without the
consent or agreement of any other party (except in the case of the Subleases, in
which case Buyer shall have such rights as are provided to it by the Subleases).
(vii) The use of the Leased Real Estate located in the Triangle
Research Park in North Carolina and the Leased Real Estate located in Malaysia
as currently used and consistent with past practice complies, in all material
respects, with the applicable Leases and with all covenants easements and
restrictions of record affecting such Leased Real Estate.
(viii) Except pursuant to the subleases and similar agreements
described on Schedule 4.11(l) (collectively, the "Existing Subleases"), no
portion of any of the Leased Real Estate has been leased or subleased to any
Person and no Person, other than one or more of the Transferred Business
Entities, has any right to use or occupy any portion of the Leased Real Estate.
All of the Existing Subleases are in full force and effect and, to Sellers'
Knowledge, no default or event or occurrence which with notice, the passage of
time or both would constitute a default, on the part of any party to any
Existing Sublease, has occurred. None of the Existing Subleases interferes or
grants rights which if exercised could reasonably be expected to interfere with
Seller's use of the affected Leased Real Estate or the conduct of the Business
thereon as currently conducted and as conducted consistent with past practice,
in a manner that has or could reasonably be expected to have a Material Adverse
Effect or a Material Real Estate Impairment.
3. General.
(i) The water, gas, electricity and other utilities serving the Owned
Real Estate and the Leased Real Estate (collectively, the "Real Estate") have
been and are currently adequate to service the normal operations conducted
thereon consistent with past practice.
(ii) Each parcel of the Real Estate has physical and, to the Sellers'
Knowledge, legal vehicular and pedestrian access to and from public roadways. To
the Sellers' Knowledge, no fact or condition exists which would result in the
termination of the current access from the Real Estate to any presently existing
highways and roads adjoining or situated on the Real Estate.
(iii) Except as set forth on Schedule 4.9(b), no Business Entity has
received any written or, to the Sellers' Knowledge, oral notice or order from
any Governmental Authority, insurance company which has issued a policy with
respect to any of the Real Estate or any board of fire underwriters or other
body performing similar functions or any other Person which (x) relates to or
alleges a violation of or nonconformity with any zoning, building, safety,
subdivision, wetlands or other similar law, code, rule, regulation, ordinance,
permit, license, certificate, covenant, restriction or condition with respect to
any of the Real Estate or the use thereof which violation of nonconformity could
reasonably be expected to have a Material Real Estate
23
Impairment, or (y) requests the performance of any material repairs, alterations
or other work that have not yet been cured or performed, as applicable. None of
the Sellers have received any written notice from any Governmental Authority or
other Person of any condemnation action, eminent domain proceeding or other
similar proceeding concerning any of the Real Estate. There is no pending
condemnation, expropriation, eminent domain, or similar proceeding affecting any
of the Real Estate and, to the Sellers' Knowledge, no such action, proceeding or
litigation is threatened.
(iv) All of the buildings and improvements situated upon the Real
Estate are operable and in normal condition and repair, subject to ordinary wear
and tear and to the items set forth on Schedule 4.9(b).
(v) Other than: (x) the Owned Real Estate, (y) the Leased Real Estate
other than the Retained Leased Real Estate, and (z) the Subleased Real Estate,
no other real estate or rights, titles, estates or interest therein is
reasonably necessary to the conduct of the Business as currently conducted and
consistent with past practice.
4.10 Year 2000 Readiness. The ▇▇▇▇▇▇ Semiconductor Sector (a) has conducted
an assessment of its information system technologies, automated manufacturing,
billing and other operations for the purpose of identifying, and (b) is engaged
in an effort to mitigate (which is continuing in the ordinary course of
business), any significant disruption in operations that it anticipates as a
consequence of the Y2K Problem. Assuming the efforts to mitigate are continued,
with respect to the Transferred Assets, by Buyer in the ordinary course of
business after the Closing Date, the Transferred Assets are not reasonably
expected to experience any disruption in operations as a consequence of the Y2K
Problem that could reasonably be expected to have a Material Adverse Effect on
the Business or to have a Material Real Estate Impairment. As used in this
Section 4.10, the "Y2K Problem" means a date-handling problem relating to the
Year 2000 date change that would cause a computer system, software or equipment
to fail to correctly perform, process and handle date-related data for the dates
within and between the twentieth and twenty-first centuries and all other
centuries.
4.11 Assumed Contract Obligations. ▇▇▇▇▇▇ has made available to Buyer a
copy or description of all outstanding active Contracts constituting:
(a) All customer contracts and open purchase orders of the Business
with a reasonably expected value in excess of $250,000 per annum;
(b) All pending bids for customer contracts for Products with a
reasonably expected value in excess of $250,000 per annum;
(c) All contracts for the employment of any Person by a Business
Entity specific to the Business and providing for cash compensation equal to or
greater than $100,000 per annum;
(d) All collective bargaining agreements specific to the Business;
(e) All consulting agreements to which the Business Entities are
parties in connection with the conduct of the Business;
24
(f) All joint venture, teaming and similar arrangements to which the
Business Entities are parties in connection with the Business;
(g) All subcontracts, agreements and other arrangements pursuant to
which a third party processes products for the Business with reasonably expected
annual payments in excess of $250,000;
(h) All agreements for the purchase by a Business Entity of raw
materials or other supplies specific to the Business with a reasonably expected
value in excess of $250,000 per annum;
(i) All agreements for the purchase by a Business Entity of equipment
specific to the Business involving outstanding commitments in excess of
$500,000;
(j) All mortgages, indentures, notes and installment obligations and
other instruments and contracts specific to the Business and relating to any
borrowing of, or issuance of letters of credit for, an amount in excess of
$250,000 by one or more Business Entities;
(k) All guaranties of any obligation specific to the Business in
excess of $250,000 by a Business Entity (excluding any non-recourse guaranties
and any endorsement made in the ordinary course of business for collection);
(l) All leases of real or personal property specific to the Business
under which a Business Entity is lessor;
(m) All leases of real property to be (i) assumed by Buyer and (ii)
subleased to Buyer;
(n) All leases of personal property specific to the Business under
which a Business Entity is lessee and is obligated to make payments of more than
$250,000 per annum;
(o) All agreements materially limiting the freedom of a Business
Entity to compete in the Business with any Person or other entity or in any
geographical area;
(p) All Contracts specific to the Business not otherwise listed with a
reasonably expected contract value in excess of $250,000 per annum or $500,000
in the aggregate; and
(q) All distributor and sales agent agreements specific to the
Business.
A list or description of each of the items described above (the "Material
Contracts") is set forth on Schedule 4.11, and Sellers have made available to
Buyer true copies of each of the Material Contracts. As of the date of this
Master Agreement, except as disclosed on Schedule 4.11, all Material Contracts
are valid, binding and enforceable against each Business Entity which is a party
thereto, and to the Sellers' Knowledge, the other parties thereto, in accordance
with their terms and are in full force and effect and, as to each Material
Contract, there does not exist thereunder any default on the part of any
Business Entity, and there does not exist any event,
25
occurrence or condition, including the consummation of the transactions
contemplated hereunder, which (after notice, passage of time, or both) would
constitute a default thereunder on the part of such Business Entity, which
default has had or would have a Material Adverse Effect on the Business. Except
as disclosed on Schedule 4.11, no Business Entity has received any written claim
from any other party to any Material Contract that any Business Entity has
breached any obligations to be performed by it thereunder, or is otherwise in
default or delinquent in performance thereunder, except any of the foregoing
which could not reasonably be expected to have a Material Adverse Effect on the
Business.
4.12 Litigation. Except as set forth on Schedules 4.12 and 4.14, there are
no actions, suits, proceedings or governmental investigations pending against
any Business Entity or Transferred Asset or, to the Sellers' Knowledge,
threatened, involving the Business or the Transferred Assets, at law or in
equity or before any Governmental Authority (including, without limitation,
relating to the Management or Release of Hazardous Materials), or that have been
settled, dismissed or resolved on or since the Financial Statements Date, that
have had or would reasonably be expected to have a Material Adverse Effect on
the Business. As of the date of this Master Agreement, no Business Entity or
Transferred Asset is subject to any judgment, stipulation, order or decree
arising from any action, suit, proceeding or investigation that individually or
in the aggregate would reasonably be expected to have a Material Adverse Effect
on the Business or a Material Real Estate Impairment.
4.13 Licenses and Permits. Each Business Entity has all licenses,
certificates of occupancy, permits and other authorizations from Governmental
Authorities necessary for the conduct of the Business or the use, ownership or
occupancy of any of the Transferred Assets as conducted, used, owned or occupied
by the Business Entities prior to the date hereof and for the use, occupancy and
operation of the Transferred Assets (collectively "Permits") except where the
failure to have such Permits could not reasonably be expected to result in a
Material Adverse Effect on the Business or a Material Real Estate Impairment.
Except as set forth on Schedule 4.13, (a) each of said Permits is in full force
and effect, (b) the Business is in compliance with the terms, provisions and
conditions thereof, except where the failure to be so in compliance could not
reasonably be expected to result in a Material Adverse Effect on the Business or
a Material Real Estate Impairment, (c) there are no, and Sellers have not
received any written notice of any, outstanding violations, notices of
noncompliance, judgments, consent decrees, orders or judicial or administrative
actions, investigations or proceedings adversely affecting any of said Permits,
and (d) to the Sellers' Knowledge, no condition exists and no event has occurred
which (whether with or without notice, lapse of time or the occurrence of any
other event) would permit the suspension or revocation of any material Permits
other than by expiration of the term set forth therein. Sellers make no
representation or warranty with respect to the transferability of the Permits to
Buyer.
4.14 Environmental Compliance. Except as set forth in Schedule 4.14, (a)
the conduct of the Business complies in all material respects with all
Environmental Laws; (b) neither ▇▇▇▇▇▇ nor any of the Transferred Subsidiaries
Manage or have Managed Hazardous Materials in connection with the operations of
the Business in a manner which, to the Sellers' Knowledge, has caused, causes or
threatens to cause environmental conditions which give rise to liability under
Environmental Laws or under common law; and (c) with respect to the Real
26
Estate and the Business, neither ▇▇▇▇▇▇ nor any of the Transferred Subsidiaries
has received and, to the Sellers' Knowledge, no one else has received, any
requests for information, notices of claim, demands or other notifications that
it or they (or any of their predecessors) are or may be potentially responsible
with respect to any Remediation or other liability arising out of or resulting
from any Hazardous Materials Released or Managed at any property now or formerly
owned, operated or leased by ▇▇▇▇▇▇ or any of the Transferred Subsidiaries or
their predecessors, or at any other property, facility or off-site location to
which the Hazardous Materials Released or Managed by ▇▇▇▇▇▇ or any of the
Transferred Subsidiaries or any of their predecessors have been transported or
disposed of or have come to be located. "Environmental Laws" shall mean all
applicable foreign, Federal, state and local laws, ordinances and regulations
pertaining to air and water quality, Hazardous Materials, waste, disposal or
other environmental matters, including the Clean Water Act, the Clean Air Act,
the Federal Water Pollution Control Act, the Solid Waste Disposal Act, the
Resource Conservation Recovery Act, the Occupational Health and Safety Act, the
Comprehensive Environmental Response, Compensation, and Liability Act, and the
rules, regulations and ordinances of the cities and counties in which the
Business is located, the Environmental Protection Agency and all other
applicable Governmental Authorities, in each case as in effect on the Closing
Date.
4.15 Absence of Certain Business Practices. To the Sellers' Knowledge, no
Business Entity nor any officer, employee or agent of any Business Entity, or
any other Person acting on their behalf, has, directly or indirectly, since the
date of formation of such Business Entity, respectively, given, offered,
solicited or agreed to give, offer or solicit any contribution, gift, bribe,
rebate, payoff, influence payment, kickback or other payment, regardless of form
and whether in money, property or services, to any customer, supplier,
governmental employee or other Person who is or may be in a position to help or
hinder the Business in connection with the conduct of the Business (a) which
subjected or could reasonably be expected to have subjected a Business Entity to
any material damage or penalty in any civil, criminal or governmental litigation
or proceeding, (b) which, if not given in the past, could reasonably be expected
to have had a Material Adverse Effect on the Business, (c) which, if not
continued in the future, could not reasonably be expected to have a Material
Adverse Effect on the Business or subject a Business Entity to suit or penalty
in any private or governmental litigation or proceeding, (d) for any purposes
described in Section 162(c) of the Code, or (e) for the purpose of establishing
or maintaining any concealed fund or concealed bank account.
4.16 Personnel Matters.
(a) Sellers have heretofore provided to Buyer a list of all of the
employees for which Buyer will be responsible pursuant to Article 6 (such
employees, collectively, "Employees of the Business") and their respective job
titles, salaries, wages, and other compensation paid during calendar year 1998
as well as dates of employment, and date and amount of last salary increase.
(b) Except as set forth on Schedule 4.16(b), there are no material
employment related disputes, grievances, or disciplinary actions pending or, to
the Sellers' Knowledge, threatened, by or between any of the Business Entities
and any Employees of the Business.
27
(c) All currently effective personnel policies and manuals of the
Business Entities are listed on Schedule 4.16(c) and true, accurate, and
complete copies of all such written personnel policies and manuals have been
made available to Buyer.
4.17 Labor Matters. This Section 4.17 does not extend to the subject matter
of Section 4.18. Except as set forth on Schedule 4.17, in relation to the
conduct of the Business:
(a) No Business Entity is obligated by, or subject to, any order of
the National Labor Relations Board or other labor board or administration, or
any unfair labor practice decision.
(b) No Business Entity is a party or subject to any pending or, to
Sellers' Knowledge, threatened labor or civil rights dispute or any other labor
or employment related law suit, controversy or grievance or any unfair labor
practice proceeding with respect to claims of, or obligations of, any employee
or group of employees. No Business Entity has during the last three years
received any notice that any labor representation petition or request is pending
or is threatened with respect to Employees of the Business.
(c) Each Business Entity is in compliance in all material respects
with all (i) Applicable Laws respecting employment and employment practices,
terms and conditions of employment and wages and hours and (ii) collective
bargaining agreements related to the Union Plants.
(d) To the Sellers' Knowledge, no Employees of the Business or former
employee of any Business Entity has any claim against any Business Entity
(whether under Applicable Law, pursuant to any employment agreement, or
otherwise) on account of, or for: (i) overtime pay, other than for the current
payroll period; (ii) wages or salary (excluding bonuses and amounts accruing
under any pension or profit-sharing plan, including but not limited to any
Benefit Arrangement (as such term is defined in Section 4.18.1)) for a period
other than the current payroll period; (iii) vacation, time off or pay in lieu
of vacation or time off, other than vacation or time off (or pay in lieu
thereof) earned in respect of the current or past fiscal year or accrued on the
Audited Closing Balance Sheet for Seller; or (iv) any other claim arising under
any law governing labor and employment matters, including without limitation,
discrimination claims.
(e) To the Sellers' Knowledge, during the last three years, there have
been no strikes, work stoppages, work slowdowns or other such concerted
activities.
4.18 Seller Benefit Plans.
4.18.1 United States.
(a) Schedule 4.18.1 lists and identifies (i) each employee
pension benefit plan, as defined in Section 3(2) of ERISA (a "Pension Plan");
(ii) each employee welfare benefit plan, as defined in Section 3(1) of ERISA (a
"Welfare Plan"); and (iii) each compensation and employment arrangement,
including, but not limited to, any fringe benefit,
28
incentive compensation, stock option, stock purchase, bonus, severance, deferred
compensation, and supplemental executive compensation plan or employment
agreement (a "Benefit Arrangement"), that is maintained by a Business Entity for
Employees of the Business based in the United States (collectively, the "U.S.
Benefit Plans"). True and complete copies of all U.S. Benefit Plans have been
provided or made available to Buyer, including, but not limited to (i) each
Pension Plan and any related trust agreement (including all amendments to such
Pension Plan and trust) and its most recent summary plan description, any
determination letter issued by the Internal Revenue Service, and (ii) each
Welfare Plan and Benefit Arrangement and any related insurance contracts or
other funding arrangement, administrative services agreement and summary plan
description and the most recent annual reports on Form 5500 required to be filed
with the Internal Revenue Service in respect of any Pension Plan, Welfare Plan
and Benefit Arrangement. Except as specifically disclosed on Schedule 4.18, no
Business Entity maintains or contributes to any Welfare Plan that provides
benefits to employees after termination of employment other than as required by
Part 6 of Title I of ERISA.
(b) Except as disclosed on Schedule 4.18.1, neither any
Business Entity nor any ERISA Affiliate is obligated to contribute to any
multiemployer plan, as defined in Section 3(37) of ERISA nor has been obligated
to contribute to any multiemployer plan, at any time during the six most recent
calendar years preceding the year of this Master Agreement. As used herein, the
term "ERISA Affiliate" shall mean a (i) corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as ▇▇▇▇▇▇, (ii) partnership or other trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
Code) with ▇▇▇▇▇▇, or (iii) member of the same affiliated service group (within
the meaning of Section 414(m) of the Code) as ▇▇▇▇▇▇, any corporation described
in clause (i) above or any partnership or trade or business described in clause
(ii) above. With respect to any such multiemployer plan, no Business Entity or
ERISA Affiliate had incurred, or is reasonably likely to incur, any withdrawal
liability under Title IV of ERISA, nor is any such plan in reorganization.
(c) Except for the Pension Plan of Choice Microsystems, Inc.,
no Pension Plan is subject to Title IV of ERISA. No liability under Subtitle C
or D of Title IV of ERISA has been or is expected to be incurred by any Business
Entity or any ERISA Affiliate with respect to any "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
▇▇▇▇▇▇ or any ERISA Affiliate. All contributions required to be made by any
ERISA Affiliate to any employee benefit plan subject to Section 412 of the Code
or Section 302 of ERISA have been timely made. No employee benefit plan subject
to Section 412 of the Code sponsored, maintained or contributed to by any ERISA
Affiliate has an "accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA
Affiliate has an outstanding funding waiver.
(d) Each Pension Plan which is intended to be qualified under
Section 401(a) of the Code as currently in effect has been determined by the
Internal Revenue Service to be so qualified and each trust related to any such
Pension Plan has been determined to be exempt from federal income tax under
Section 501(a) of the Code. There have been no prohibited transactions (as
described in Section 406 or Section 4975 of the Code) with respect to any
Pension Plan for which there is any outstanding liability. No material
litigation or
29
administrative or other proceedings involving the U.S. Benefit Plans has
occurred which would reasonably be expected to have a Material Adverse Effect on
the Business.
(e) Each U.S. Benefit Plan has been administered in accordance
with its terms and Applicable Law except where the failure to be so administered
either individually or in the aggregate with respect to all U.S. Benefits Plans,
would not have a Material Adverse Effect on the Business.
4.18.2 Non-U.S. Employee Benefit Plans.
(a) Except as set forth on Schedule 4.18.2, with respect to all
Employees of the Business whose employment is based outside of the United
States, none of the Business Entities presently maintains, contributes to or has
any liability under any material non-U.S. bonus, incentive compensation, profit
sharing, retirement, pension, group insurance, death benefit, health,
disability, stock option, stock purchase, savings, deferred compensation,
severance pay or termination pay (to the extent established and formally
communicated to employees), welfare or other employee benefit or fringe benefit
plan, program or arrangement, excluding any foreign government sponsored or
mandated plan, program or arrangement affecting such employees ("Government
Sponsored or Mandated Plans"). The plans, programs and arrangements set forth on
Schedule 4.18.2 are herein referred to as the "Non-U.S. Employee Benefit Plans."
(b) With respect to each of the Non-U.S. Employee Benefit
Plans, ▇▇▇▇▇▇ has made or will, prior to the Closing Date, make, available to
Buyer true and complete copies of:
(i) The plan documents, including any related trust
agreements or insurance contracts, including amendments thereto,
or a written summary of the terms and conditions of the plan if
there is no written plan document.
(ii) With respect to any Non-U.S. Employee Benefit Plan
maintained primarily for the benefit of employees of a Business
Entity, the most recent actuarial valuations and financial
statements, if any.
(c) To the Sellers' Knowledge, the Non-U.S. Employee Benefit
Plans and Government Sponsored or Mandated Plans administered by Sellers have
been administered and are in material compliance with all material requirements
of Applicable Law and the terms of each such plan; any Non-U.S. Employee Benefit
Plan which is intended to be qualified under Applicable Law or registered or
approved by a Governmental Authority has been determined to be so qualified,
registered or approved by the appropriate Governmental Authority; and to the
Sellers' Knowledge, nothing has occurred between the date of the last such
determination and the Closing Date to cause the appropriate Governmental
Authority to revoke such determination or which would materially adversely
affect the continuing qualified, registered or approved status of such Non-U.S.
Employee Benefit Plan.
30
(d) All contributions (including premiums) required by law or
contract to have been paid or accrued, under or with respect to the Non-U.S.
Employee Benefit Plans and Government Sponsored or Mandated Plans to the Closing
Date (including periods from the first day of the then current plan year to the
Closing Date) will have been paid or accrued prior to the Closing Date except to
the extent failure to pay or accrue such contributions individually or in the
aggregate would not be reasonably expected to have a Material Adverse Effect on
the Business.
(e) The accrued benefits provided under each Non-U.S. Employee
Benefit Plan and Government Sponsored or Mandated Plans providing retirement,
severance or similar benefits (to the extent established and formally
communicated to employees), determined as of the Closing Date, will not exceed
the fair market value as of such date of the assets applicable to such Non-U.S.
Employee Benefit Plan or Government Sponsored or Mandated Plan, or the book
reserve, balance sheet reserve or other reserve with respect thereto as of the
Closing Date. Notwithstanding the foregoing, the only amounts so required to be
so funded or reserved shall be the amounts required to be funded, reserved or
provided for in conformity with generally accepted accounting principles in the
applicable country. For this purpose, "accrued benefits" means the present value
of all retirement, severance or similar benefits (as described above) under a
plan recognizing salary and service to Closing.
(f) There are no material pending or, to the Sellers'
Knowledge, threatened claims (other than routine claims for benefits),
investigations, litigation or other enforcement actions against Seller, the
Business Entities or any of their officers, directors, employees or agents, with
respect to any of the Non-U.S. Employee Benefit Plans, nor is there any other
liability with respect to such plans except those incurred in the normal course
of operation.
(g) No material improvement in the benefits accrued or provided
under the Non-U.S. Employee Benefit Plans will be made on or before the Closing
Date.
4.19 Insurance. Schedule 4.19 contains a list of all material insurance
policies (excluding title insurance policies) maintained by or on behalf of or
covering any Seller that is specific to the Business (the "Policies"). Each
Business Entity has made available to Buyer copies of all current declaration
sheets relating to the Policies. Except as noted on Schedule 4.19, as of the
date of the Agreement, the Policies are in full force and effect, no notices of
cancellation or nonrenewal have been received by any Business Entity with
respect thereto, and all premiums due thereon have been paid.
4.20 Powers of Attorney. Except as set forth on Schedule 4.20, none of the
Business Entities has given any irrevocable power of attorney (other than such
powers of attorney given in the ordinary course of business with respect to
routine matters or as may be necessary or desirable in connection with the
consummation of the transactions contemplated herein) to any person, firm, or
corporation for any purpose whatsoever with respect to the Business.
4.21 Brokers. No agent, broker, Person or firm acting on behalf of Sellers
or their stockholders is, or will be, entitled to any commission or broker's or
finder's fees from any of
31
the parties hereto, or from any Person controlling, controlled by or under
common control with any of the parties hereto, in connection with any of the
transactions contemplated herein.
4.22 Taxes. Except as set forth on Schedule 4.22:
(a) Each Business Entity has, except where failure to do so would not
have a Material Adverse Effect on the Business or a Material Real Estate
Impairment, (i) timely filed (or caused to be filed) all Tax Returns required to
be filed by it and each Tax Return is true, complete and accurate, (ii) timely
paid all Taxes shown thereon as due and owing, (iii) paid all other Taxes which
otherwise have become due and payable, and (iv) adequately provided for, on its
books of account and related records, liability for all other current Taxes not
yet due and payable.
(b) None of the Business Entities has received any written notice of a
material proposed adjustment, deficiency or underpayment in relation to the
Business, which notice has not been satisfied by payment or been withdrawn, and
there are no material claims that have been asserted or threatened relating to
Taxes related to the Business.
(c) Each of the Business Entities has withheld and paid all Taxes
required to be withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or third party in
relation to the Business.
(d) There are no liens with respect to Taxes upon the Transferred
Assets other than customary liens for current Taxes not yet due and payable.
(e) As relates to the Business, none of the Business Entities (i) has
ever made any election under Treasury Regulation Section 301.7701-3(c) to treat
any of the Transferred Subsidiaries as other than an association, except for
entities organized in Malaysia, or (ii) has filed a consent under Code Section
341(f) concerning collapsible corporations.
(f) None of the Transferred Subsidiaries formed other than under the
laws of a state of the United States has ever owned a United States real
property interest within the meaning of Code Section 897(c).
(g) With respect to the Business Entities other than ▇▇▇▇▇▇
("Subsidiary Entities"): (i) no Subsidiary Entity has requested, nor has there
been granted with respect thereto, an extension of time within which to file a
Tax Return; (ii) no Subsidiary Entity is under audit, nor are any of such
entities aware of any material threatened or proposed audits of their Tax
Returns; (iii) no claim for Taxes (or request for Tax Returns) has ever been
made of a Subsidiary Entity in a jurisdiction where such entity does not file
Tax Returns; (iv) except as provided under Treas. Reg. Section 1.1502-6 (or any
similar provision of state, local or foreign law), none of the Subsidiary
Entities has any liability for or any obligation to pay Taxes of another or of
▇▇▇▇▇▇ as a transferee or successor, by contract or otherwise; (v) no Subsidiary
Entity has waived any statute of limitations in respect of Taxes or agreed to
any extension of time with respect to a Tax assessment or deficiency; (vi) no
Subsidiary Entity is a party to a closing agreement, or the subject of a private
ruling, concerning Taxes with any Governmental
32
Authority; (vii) none of the Subsidiary Entities is required to make any
adjustment under Section 481 of the Code (or any comparable provision of state,
local or foreign law) by reason of a change in accounting method; (viii) no
Subsidiary Entity is a partner in any entity considered to be a partnership for
federal income tax purposes; (ix) no Subsidiary Entity has ever entered into an
advanced pricing agreement or any other agreement, whether arising upon audit or
otherwise, relating to Section 482 of the Code, and (x) none of the Subsidiary
Entities has made any payments, is obligated to make any payments, or is a party
to any agreement, including this Master Agreement, that could obligate it to
make any payments that will not be deductible under Code Section 280G.
(h) Except as disclosed on Schedule 4.22(h), ▇▇▇▇▇▇ has never (with
respect to the Business and relating to any taxable year subsequent to fiscal
1993 ) entered into an advanced pricing agreement or any other agreement,
whether arising upon audit or otherwise, relating to Section 482 of the Code,
and ▇▇▇▇▇▇ has never (with respect to the Business) made any payments, is not
obligated to make any payments, and is not a party to any agreement, including
this Master Agreement, that could obligate ▇▇▇▇▇▇ to make any payments that will
not be deductible under Code Section 280G.
(i) With respect to the three year period ending with the Closing
Date, (i) ▇▇▇▇▇▇, ▇▇▇▇▇▇ Malaysia and their Affiliates in the United States have
taken the position, for Federal income tax purposes, that: (A) all or
substantially all of the sales made by ▇▇▇▇▇▇ Malaysia to ▇▇▇▇▇▇ do not generate
United States source income within the meaning of Code Section 861 through 865,
and (B) ▇▇▇▇▇▇ Malaysia does not have an office or other fixed place of business
in the United States nor does ▇▇▇▇▇▇ Malaysia have any employees or agents
engaging in sales activities in the United States; and (ii) there has not been
any challenge to such positions taken by the Internal Revenue Service.
4.23 Transferred Assets - General. Except for the Excluded Assets and
except as set forth on Schedule 4.23, the Transferred Assets include (a) all of
the assets and rights of ▇▇▇▇▇▇ and the other Business Entities which were or
are material to the conduct of the Business as conducted by ▇▇▇▇▇▇ and the other
Business Entities during fiscal 1999, subject to such changes as have occurred
in the ordinary course of business since the end of ▇▇▇▇▇▇' fiscal 1998 and (b)
all assets that will be reflected on the Audited Closing Balance Sheet.
4.24 Personal Property. Except as set forth on Schedule 4.24, to the
Sellers' Knowledge, the items of personal property included in the Transferred
Assets and presently and actively used in the operation of the Business are in
normal operating condition, free of any defects (except those resulting from
normal wear and operation) which individually or in the aggregate, reasonably
could be expected to have a Material Adverse Effect on the Business. Matters
within the scope of Section 4.10 are outside the scope of this Section 4.24.
4.25 Warranty Claims. The Business Entities have paid (whether in money,
property or services) claims relating to breaches of express or implied
warranties (excluding claims founded upon negligence, strict liability in tort
or other similar legal theory) made with respect to products of the Business
▇▇▇▇▇▇' fiscal years 1998, 1997 and 1996 in amounts not in excess of 2.5% of
sales of the Business for such years, respectively. Except as set forth on
Schedule 4.25, there are no pending or, to the Sellers' Knowledge, threatened
claims for the breach of any express or implied warranty
33
made with respect to products of the Business, except for individual claims
which involve claims for money, property or services of less than $50,000.
4.26 Inventory. Except for inventory in the possession of sales agents and
distributors, in transit, and as disclosed prior to the Closing Date, all
inventory of the Business (other than Excluded Assets) is located at the
Transferred Facilities.
4.27 Malaysian Activities. To the best of the knowledge of ▇▇▇▇▇▇ Malaysia
and ▇▇▇▇▇▇, with respect to the three year period ending with the Closing Date,
▇▇▇▇▇▇ Malaysia and ▇▇▇▇▇▇, with respect to substantially all of the sales made
by ▇▇▇▇▇▇ Malaysia to ▇▇▇▇▇▇, represent that:
(a) title passage occurred from ▇▇▇▇▇▇ Malaysia to ▇▇▇▇▇▇ outside the
United States;
(b) shipping was made by a freight forwarder located outside the
United States or, in any other situation, FOB at a location outside the United
States;
(c) all risk of loss passed from ▇▇▇▇▇▇ Malaysia to ▇▇▇▇▇▇ outside the
United States;
(d) all insurance and shipping costs are borne by ▇▇▇▇▇▇;
(e) all governmental filing made in the United States reflect the
facts that ▇▇▇▇▇▇ is the importer of record to the United States; and
(f) all documentation was consistence with the foregoing.
Furthermore, ▇▇▇▇▇▇ Malaysia and ▇▇▇▇▇▇ represent that ▇▇▇▇▇▇ Malaysia does not
have any leased or owned premises available for its use in the United States in
its own name nor does ▇▇▇▇▇▇ Malaysia have any employees on its payroll engaging
in sales activities in the United States.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Buyer and Parent represent and warrant to ▇▇▇▇▇▇ as set forth below as of
the date of this Master Agreement:
5.1 Organization and Standing of Buyer and Parent; Charter and Bylaws. Each
of Buyer and Parent is a corporation duly organized, validly existing and in
good standing under the laws of Delaware and has all requisite corporate power
and authority to enter into this Master Agreement and the Ancillary Agreements,
to carry out the transactions contemplated hereby and thereby to perform its
obligations hereunder. Copies of the charter and bylaws or other organizational
documents of each of Buyer and Parent have been made available to ▇▇▇▇▇▇, and
each such copy is true, correct and complete.
34
5.2 Authorization. The execution, delivery and performance of this Master
Agreement and the Ancillary Agreements executed or to be executed by Buyer and
Parent pursuant to this Master Agreement, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate and other action on the part of Buyer and Parent. This
Master Agreement and the Ancillary Agreements executed or to be executed by
pursuant to this Master Agreement have been, or will have been, at the time of
their respective executions and deliveries, duly executed and delivered by a
duly authorized officer of Buyer and Parent, as the case may be.
5.3 Enforceability. This Master Agreement and each Ancillary Agreement
constitutes, or when executed and delivered will constitute, the valid and
legally binding obligation of Buyer and Parent, enforceable in accordance with
its terms, except as such enforceability may be limited by equitable principles
and by applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium or similar laws relating to or affecting the rights of creditors
generally.
5.4 Compliance with Other Instruments and Laws. The execution, delivery and
performance of this Master Agreement and the Ancillary Agreements executed or to
be executed by Buyer and Parent pursuant to this Master Agreement, and the
consummation of the transactions contemplated hereby and thereby will not
conflict with or result in any violation of or default under any provision (a)
of the charter or bylaws of Buyer or Parent, or (b) of any mortgage, indenture,
trust, lease, partnership or other agreement or other instrument, permit,
concession, grant, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Buyer or Parent or any of their
properties or assets, the result of which, with respect to items identified in
clause (b) would (either individually or in the aggregate) have a material
adverse effect on the operations or financial condition of Buyer or Parent and
their subsidiaries, taken as a whole, or would materially impair Buyer's or
Parent's ability to consummate the transactions contemplated hereby (a "Material
Adverse Effect on Buyer").
5.5 Governmental Authorizations and Consents. Except as set forth on
Schedule 5.5, no consents, licenses, approvals or authorizations of, or
registrations or declarations with, any Governmental Authority, bureau, agency
or commission, or any third party, are required to be obtained or made by Buyer
or Parent or their Affiliates in connection with the execution, delivery,
performance, validity and enforceability of this Master Agreement or the other
Ancillary Agreements, other than (a) a filing with the Federal Trade Commission
and the Department of Justice under the HSR Act, (b) a filing with the Committee
on Foreign Investment in the United States under Section 721 of Title VII of the
United States Defense Production Act of 1950, as amended by Section 5021 of the
Omnibus Trade and Competitiveness Act of 1988, and (c) other consents, licenses,
approvals, authorizations, registrations or declarations, where the failure to
obtain such would not have a Material Adverse Effect on Buyer. Neither Buyer nor
Parent is currently engaged in, or contemplating, any business transaction that
would be reasonably expected to hinder or delay the authorizations and consents
referred to in this Section 5.5.
35
5.6 Litigation. As of the date of this Master Agreement, no action, suit,
proceeding or governmental investigation is pending or, to the knowledge of
Buyer or Parent or their Affiliates, threatened, against Buyer or Parent or
their properties, at law or in equity or before any Governmental Authority that
seeks to question, delay or prevent the consummation of the transactions
contemplated hereby.
5.7 Access. Buyer and Parent have received and reviewed the Baseline
Financial Statements and are acquainted with the Business. Buyer and Parent have
had an opportunity to review the assets, books, records and contracts of the
Business, and has been given the opportunity to meet with officers and other
representatives of ▇▇▇▇▇▇ for the purpose of investigating and obtaining
information regarding the operations of the Business and its financial and legal
affairs.
5.8 Financial Capacity. Buyer and Parent have heretofore provided to ▇▇▇▇▇▇
an accurate written explanation of the Financing. As used herein, "Financing"
shall mean the financing described in the "highly confident" and commitment
letters (the "Commitment Letters") received by Buyer from financing sources
providing for sufficient funds to pay the cash portion of the Purchase Price, to
pay expenses in connection with the purchase of the Transferred Assets and to
perform any necessary refinancing of existing indebtedness of the Business;
provided that, in the event that any portion of the Financing pursuant to the
Commitment Letters becomes unavailable, regardless of fault, Buyer may obtain
such portion of the Financing from other sources, on terms no less favorable to
Buyer than those applicable to the portion of the Financing which has become
unavailable; provided, further, that such new terms do not reduce Buyer's equity
to less than $90,000,000.
5.9 Brokers. No agent, broker, Person or firm acting on behalf of Buyer or
Parent or their stockholders is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated hereby.
5.10 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976. Parent is not
controlled by any other entity for purposes of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the implementing regulations
thereunder, 16 C.F.R. Parts ▇▇▇-▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇▇▇"). The total assets and
annual net sales of the person consisting of Parent and all entities it
controls, determined at the time of Closing in accordance with Section 801.11 of
the HSR Rules, are each less than $10 million.
ARTICLE 6
COVENANTS RELATING TO PERSONNEL ARRANGEMENTS
6.1 Employees; Collective Bargaining Agreements; Transferee Employees.
(a) Buyer will recognize and engage in collective bargaining with the
labor unions which are the bargaining agents for the represented employees at
the Union Plants. Following the Closing, Buyer will continue in effect the terms
and conditions of employment for the represented employees at the Union Plants,
except as those terms and conditions may be
36
modified pursuant to the collective bargaining process. Sellers shall not agree
to any modification or change in the terms and conditions of employment for the
represented employees at the Union Plants prior to the Closing without Buyer's
written approval.
(b) Effective upon the Closing Date as of 11:59 p.m. Eastern Daylight
Savings Time, Sellers shall terminate the employment of the Employees of the
Business, other than the employees of the Transferred Subsidiaries, and Buyer or
one of its Subsidiaries shall offer employment to all employees whose employment
is so terminated effective as of the time of their termination of employment
with Sellers, including all employees who are not actively at work on the
Closing Date and who (i) are not actively at work and who have recall or
return-to-work rights under any collective bargaining agreement, or (ii) are not
actively at work due to short-term disability, military service or other
authorized leave of absence provided such employees return to work at the end of
any such authorized leave of absence or in the case of military leave, before
their statutory re-employment rights expire. In addition, Buyer shall offer
employment to all Employees of the Business who on the Closing Date are absent
from work due to a long-term disability and who notify Buyer within six months
of the date of disability that they have recovered from such long-term
disability. Each such offer shall be made on terms and conditions, including
compensation and benefits, substantially equivalent in the aggregate to those
provided by Sellers on the date hereof. All such employees who accept Buyer's
offer of employment and all employees of Transferred Subsidiaries shall be
referred to herein as "Transferee Employees." Except as otherwise provided
herein, Sellers shall be responsible for (by payment or accrual on the Final
Closing Balance Sheet) wages, salaries and benefits (including vacations) of
employees until they become Transferee Employees.
6.2 Severance Obligations. Buyer will be solely responsible for
obligations, if any, for severance pay for any Employees of the Business who do
not become Transferee Employees if Buyer did not offer employment to such
employees on substantially the same terms as such employees were employed by
Sellers. Notwithstanding anything in this Agreement to the contrary, Buyer shall
be responsible for severance pay to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, whether
termination of either or both of such individuals occurs before or after the
Closing Date. Buyer shall be solely responsible for any obligation for severance
pay for Employees of the Business who become Transferee Employees and are
subsequently terminated by Buyer. Buyer acknowledges that it has not informed
Sellers of any planned or contemplated decisions or actions by Buyer or one of
its subsidiaries that would require service of notice under the Warn Act. Buyer
agrees that it will be solely responsible for any liabilities created if either
it or any of its subsidiaries takes any action (other than as set forth in the
following sentence) which will cause the notice provision of the Warn Act to
become applicable to the transactions contemplated by this Agreement. Buyer
acknowledges that it has been informed by Seller that the closing of the 4"
wafer FAB of the plant located in Findlay, Ohio, and the terminations related
thereto, will require service of notice under the Warn Act and that the timing
of some of such terminations will require Buyer to provide certain of such
notices following the Closing Date.
37
6.3 Plans, Benefits and Policies.
(a) Except as otherwise provided herein, Buyer and its Subsidiaries
will, as of 12:00 a.m. Eastern Daylight Savings Time on the day immediately
after the Closing Date, adopt and provide for Transferee Employees whose
employment is based in the United States employment and benefit packages
(including, to the extent applicable, profit sharing and retirement plans,
medical, severance, and post-retirement benefits) equivalent to Buyer's
employment and benefit packages maintained for similarly situated employees of
Buyer.
(b) Buyer and its Subsidiaries will credit Transferee Employees with
service with Sellers (and predecessors of Sellers) for purposes of (i) vesting
for and eligibility to participate in any employee pension benefit plans (as
defined in Section 3(2) of ERISA), but not for benefit accruals; (ii) any
waiting periods, eligibility or pre-existing condition limitations for employee
welfare benefit plans (as defined in Section 3(1) of ERISA); and (iii)
eligibility and benefit computation for vacation and severance pay plans;
provided, however, that with respect to vacation plans for the remainder of
calendar year 1999 only, Buyer shall maintain vacation plans equivalent to, and
in lieu of, Sellers' vacation plans covering the Transferee Employees
immediately prior to the Closing Date (offset by vacation time used under
Sellers' vacation plans as of the Closing Date). Buyer shall credit Transferee
Employees with any amounts paid prior to the Closing Date under any Welfare Plan
that is a health plan toward the satisfaction of deductible amounts and
copayment minimums under the Buyer's corresponding welfare benefit plans.
(c) Effective as of 11:59 p.m. Eastern Daylight Savings Time on the
Closing Date, sponsorship of the ▇▇▇▇▇▇ Corporation Union Retirement Plan shall
be transferred to the Buyer and Buyer shall become the successor employer under
such plan and thereby shall assume all liabilities related to such plan.
(d) ▇▇▇▇▇▇ and Buyer shall effectuate a trust-to-trust transfer of the
assets and liabilities of the ▇▇▇▇▇▇ Corporation Retirement Plan in respect of
the account balances of Transferee Employees to a defined contribution plan
established or maintained by Buyer or one of its Subsidiaries (the "Buyer's
Retirement Plan") as follows. As soon as administratively practicable after the
Closing Date, ▇▇▇▇▇▇ shall cause the account of each Transferee Employee in the
▇▇▇▇▇▇ Corporation Retirement Plan to be valued and assets equal in value to the
amount credited each such Transferee Employee's account under the ▇▇▇▇▇▇
Corporation Retirement Plan, determined without regard to any vesting schedule,
to be transferred to the trust maintained under Buyer's Retirement Plan. Such
transferred assets shall be in cash or, to the extent mutually agreed upon by
▇▇▇▇▇▇ and Buyer, in kind, and shall also include any promissory notes
evidencing outstanding loan balances owed to the ▇▇▇▇▇▇ Corporation Retirement
Plan by the Transferee Employees. Prior to, and as a condition of, any transfer
of assets from the ▇▇▇▇▇▇ Corporation Retirement Plan to Buyer's Retirement
Plan, each party shall provide the other with a copy of a determination letter
from the Internal Revenue Service, or other reasonably satisfactory evidence,
representations and relevant undertakings, including an opinion of counsel,
evidencing the tax-qualified status of its plan and the tax-exempt status of the
applicable plan's trust. As of the transfer date, and contingent upon the
transfer, Buyer shall be liable for the
38
payment of benefits accrued by and liabilities transferred in respect of the
Transferee Employees under the ▇▇▇▇▇▇ Corporation Retirement Plan.
(e) As soon as practicable after the Closing Date, ▇▇▇▇▇▇ and Buyer
shall take any action necessary to transfer the accounts of Transferee Employees
in the "cafeteria plan," as defined in section 125 of the Code, maintained by a
Seller to a cafeteria plan established or maintained by Buyer or one of its
subsidiaries.
(f) Except as otherwise provided herein, as of 11:59 p.m. Eastern
Daylight Savings Time on the Closing Date all Transferee Employees whose
employment is based in the United States shall cease participation in Seller
Benefit Plans.
(g) Sellers or the applicable employee benefit programs administered by
Sellers shall be responsible for benefits accrued or claims incurred prior to
the Closing with respect to Transferee Employees and their eligible dependents
in accordance with the provisions of the applicable Seller's employee benefit
program with respect to: (i) disability benefits, both long-term and short-term,
for disabilities that commenced before 11:59 p.m. Eastern Daylight Savings Time
on the Closing Date; (ii) benefits for confinements covered under Seller's
medical plans that commenced before 11:59 p.m. Eastern Daylight Savings Time on
the Closing Date; (iii) health care benefits for services rendered or materials
received under Seller's medical plans before 11:59 p.m. Eastern Daylight Savings
Time on the Closing Date; and (iv) worker's compensation benefits for
disabilities resulting from an accident or occurrence while employed by Seller
or a Subsidiary of Seller or a predecessor thereof which occurred prior to the
Closing Date.
(h) After Closing, Buyer and Sellers will cooperate with each other and
provide each other such information as is required concerning Transferee
Employees in order to determine whether a Transferee Employee is entitled to
compensation from either party or benefits under any plan, program or
arrangement sponsored or maintained by either party.
(i) No provision in this Section 6.3 shall create any third-party
beneficiary rights in any employee or former employee (including any beneficiary
or dependent thereof) of ▇▇▇▇▇▇, any Business Entity or any of their Affiliates.
(j) Nothing in this Section 6.3 shall be construed to constitute an
assumption by Parent or Buyer of any Retirement Plan Accruals.
(k) Notwithstanding the foregoing, Buyer shall assume any obligation
that ▇▇▇▇▇▇ has to any Transferred Employee, whether based inside or outside of
the United States, with respect to the ▇▇▇▇▇▇ supplemental employee retirement
plan.
6.4 Foreign Employees. As of the Closing Date Buyer shall provide benefit
plans for Transferee Employees whose employment is based outside the U.S. which
are reasonably equivalent, in the aggregate, to those provided by Sellers
immediately prior to the Closing Date, subject to the right of Buyer and its
Subsidiaries to amend or terminate such benefit plans. Buyer
39
shall assume all obligations with respect to all German pension supplements
including that disclosed on Schedule 4.18.2.
6.5 Commissions and Bonuses. Sellers and Buyer agree that Employees of the
Business who become Transferee Employees will continue under the applicable
commissions or bonus compensation policy of Seller through July 2, 1999. Buyer
shall use commercially reasonable efforts to cooperate with Sellers in preparing
the necessary sales and business performance data required to calculate such
commissions or bonuses for performance during such period. Payment of such
bonuses will be allocated between Sellers and Buyer on the basis of time of
ownership of the unit for the applicable period for which the bonus is being
paid. Sellers will use commercially reasonable efforts to forward such payments
to such Transferee Employees as soon as possible, and Sellers shall invoice
Buyer for its allocated share of such payments. Commissions with respect to
shipments prior to the Closing Date and which were not accrued for in the Final
Closing Balance Sheet will be paid by Sellers; all other commissions will be
paid by Buyer.
ARTICLE 7
COVENANTS OF SELLERS
7.1 Conduct of Business.
(a) Except as set forth on Schedule 7.1 or as may be otherwise
expressly permitted by this Master Agreement or with the prior written consent
of Buyer in Buyer's sole discretion, from the date hereof and prior to the
Closing, ▇▇▇▇▇▇ will, and will cause each Business Entity to: (i) operate the
Business only in the ordinary course and substantially in accordance with past
practice and will use its reasonable efforts to not take any action inconsistent
with this Master Agreement or with the consummation of the Closing; (ii) use
commercially reasonable efforts to preserve intact the organization of the
Business; (iii) continue in full force and effect all existing insurance
policies (or comparable insurance) specific to the Business or the Transferred
Assets; and (iv) except for changes resulting from the ongoing reorganization of
the sales distribution organization of the ▇▇▇▇▇▇ Semiconductor Sector unrelated
to the transactions contemplated by this Master Agreement, use commercially
reasonable efforts to preserve each Business Entity's relationships with its
suppliers, customers, licensors and licensees and others having business
dealings with any Business Entity relating to the Business.
(b) Without limiting the generality of Section 7.1(a), and except as
may be otherwise expressly permitted by this Master Agreement or with the prior
written consent of Buyer, in Buyer's sole discretion, from the date hereof
through the Closing, ▇▇▇▇▇▇ shall not permit any Business Entity, with respect
to the Business, to:
(i) enter into, extend, materially modify or renew any Contract
in connection with the Business that would increase or cause Buyer to
be obligated to pay future payments in excess of $400,000 per year, in
the aggregate with other such Contracts, or otherwise materially
affect the rights or obligations of any Business Entity under such
Contract, except in the ordinary course;
40
(ii) conduct the Business in a manner that departs materially
from the manner in which the Business was being conducted prior to the
date of this Master Agreement or take any action or permit to occur
any event set forth in Section 4.4;
(iii) sell, assign, transfer, convey, lease, sub-lease, mortgage,
pledge or otherwise dispose of or encumber or allow the encumbrances
of any of the Transferred Assets or any interests therein or exercise
any purchase option or right of first refusal contained in any of the
Transferred Assets, except in the ordinary course of business and,
without limiting the generality of the foregoing, the Business
Entities may maintain and sell inventory consistent with its past
practices;
(iv) fail to maintain the Transferred Assets in substantially
their current state of repair, excepting normal wear and tear, or fail
to replace consistent with the Business Entities' past practice
inoperable, worn-out or obsolete or destroyed Transferred Assets;
(v) intentionally do any other act or intentionally fail to take
any action which would cause any representation or warranty of ▇▇▇▇▇▇
in this Master Agreement to be or become untrue in any material
respect;
(vi) make any material change in its accounting methods except to
the extent required by GAAP;
(vii) incur or assume any debt, obligation, trade payable or
liability for which the Business is liable (whether absolute or
contingent and whether or not currently due and payable), except in
the ordinary course of business or obligations under Material
Contracts;
(viii) pay, directly or indirectly, any of the Business Entities'
liabilities as they relate to the Business before the same became due
in accordance with their terms or defer the payment of any liabilities
or change its payable levels, in each case other than in the ordinary
course of business;
(ix) accelerate the collection, directly or indirectly, of any of
its accounts receivable other than in the ordinary course of business
or defer the collection of any such accounts other than in the
ordinary course of business;
(x) defer or delay the purchase of any inventory or change its
inventory levels, except in the ordinary course of business;
(xi) other than in the ordinary course of business, cancel any
debts or waive any claims or rights of substantial value;
41
(xii) sell, transfer, or otherwise dispose of any of its
Transferred Assets, other than in the ordinary course of business at
prices, on terms and in quantities consistent with past practice;
(xiii) make any loan or advance other than in the ordinary course
of business; (xiv) cancel, compromise, knowingly waive or lease any
material right or claim (or series of related rights and claims) under
Material Contracts, outside the ordinary course of business;
(xv) make a change in accounting method, keeping of books of
account or accounting practices, or make any election for Tax purposes
or for purposes of a Tax Return (or have any such election made on its
behalf) except as set forth in Sections 4.22 and 10.20, or enter into
any agreement, arrangement or settlement with respect to Taxes;
(xvi) make any change in the rate of compensation. commission,
bonus or other direct or indirect remuneration payable, or agree to
pay, conditionally or otherwise, any bonus, incentive, retention or
other compensation, retirement, welfare, fringe or severance benefit
or vacation pay, to or in respect of any Employee of the Business,
other than the increases and payments in the ordinary course of
business consistent with past practice in the compensation payable to
Employees of the Business; or
(xvii) agree or otherwise become obligated to do any of the
foregoing.
(c) Notwithstanding anything to the contrary contained herein, but
without limiting the effects of the representations and warranties set forth in
Sections 4.7 and 4.23, (i) at any time prior to the Closing, Sellers may cause
any asset of a Transferred Subsidiary that would not be included in the
Transferred Assets if the assets, rather than the stock, of such Transferred
Subsidiary were being conveyed hereunder, to be transferred to ▇▇▇▇▇▇ or one or
more of its Subsidiaries, and (ii) prior to the Closing, ▇▇▇▇▇▇ shall remove
from the books of each Subsidiary any intracompany receivable or intracompany
payable, so that at and after the Closing no Subsidiary shall owe, or have the
right to receive from, ▇▇▇▇▇▇ or any of its Subsidiaries any amount for goods,
services or cash advances or other extensions of credit provided prior to the
Closing.
7.2 Non-Competition. For a period of five (5) years from the Closing Date,
▇▇▇▇▇▇ shall not, and shall not permit any Affiliate of ▇▇▇▇▇▇ to, for its own
account or for the account of others, directly or indirectly (i) engage in any
Competing Business, or (ii) own, manage, operate, join, control or participate
in the ownership, management, operation or control of any person or entity who
or which at any relevant time during such period is engaged in any Competing
Business. Ownership of not more than 10% of the outstanding equity of any
company registered under Section 12 of the Securities Exchange Act of 1934 or
ownership in any venture, partnership or other person or entity that does not
constitute an Affiliate of ▇▇▇▇▇▇ shall not be a violation of this Section 7.2.
42
(a) As used herein, "Competing Business" shall mean the design,
production, manufacture, assembly, testing, distribution, marketing or sale for
▇▇▇▇▇▇' own account or for the account of others of any product that has
substantially the same specifications as any Products or the purchase for resale
or repackaging of any Products.
(b) For a period of one year from and after the Closing Date, ▇▇▇▇▇▇
will not and will cause its Affiliates not to, directly or indirectly, solicit
or attempt to solicit any person or entity who is or has been a customer,
supplier, licensor, licensee or business relation of the Business prior to or
during such period to cease its particular business relationship with the
Business.
(c) For a period of two years from the Closing Date with respect to any
director, officer, employee or agent, no party hereto will, and the parties
hereto will cause their respective Affiliates not to, directly or indirectly,
solicit or induce any person or entity who is a director, officer, employee or
agent of the other party or any of its Affiliates to terminate his, her or its
relationship with, or employment by, such entity. This Subsection 7.2(c) shall
not prohibit the parties and their Subsidiaries from engaging in general
solicitations, in the form of newspaper, internet and similar advertising and
solicitations, and accepting inquiries and applications in response thereto.
(d) This Section 7.2 shall not prevent Sellers or their Affiliates from
engaging in the activities contemplated by the Ancillary Agreements or acquiring
the capital stock or assets of any business that derives less than fifteen
percent (15%) of its consolidated revenues during the twelve calendar months
immediately preceding such acquisition from any Competing Business, so long as
▇▇▇▇▇▇ uses commercially reasonable efforts to divest that portion of the
acquired business that is engaged in a Competing Business as soon as
commercially practicable.
(e) The restrictive covenants contained in this Section are covenants
independent of any other provision of this Master Agreement and the existence of
any claim which any party to this Master Agreement may allege against any other
party to this Master Agreement, whether based on this Master Agreement or
otherwise, shall not prevent the enforcement of these covenants. Each of ▇▇▇▇▇▇
and Buyer agrees that the other's remedies at law for any breach or threat of
breach of the provisions of this Section will be inadequate, and that each party
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Section and to enforce specifically the terms and provisions
hereof, in addition to any other remedy to which such party may be entitled at
law or equity. In the event of litigation regarding the covenant not to compete,
the prevailing party in such litigation shall, in addition to any other remedies
the prevailing party may obtain in such litigation, be entitled to recover from
the other party its reasonable legal fees and out of pocket costs incurred by
such party in enforcing or defending its rights hereunder. The length of time
for which this covenant not to compete shall be in force shall not include any
period of violation or any other period required for litigation during which the
party seeking to enforce this covenant seeks to enforce this covenant. Should
any provisions of this Section be adjudged to any extent invalid by any
competent tribunal, such provision will be deemed modified to the extent
necessary to make it enforceable.
7.3 Access. Subject to reasonable notice and as permitted by law, each
Business Entity shall afford to Buyer and Parent and their respective officers,
employees, accountants,
43
counsel and other agents and representatives full access during normal business
hours throughout the period prior to the Closing Date to all of their officers,
employees and properties and full access for inspection and copying of all Books
and Records, Contracts, commitments and any other information relating to the
Business and, during such period, each Business Entity shall furnish promptly to
Buyer and its representatives in relation to the Business access to all other
information concerning the business, properties and personnel of the Business as
Buyer may reasonably request. Each Business Entity shall promptly upon request
provide Buyer access to a true, complete and correct copy of each written
agreement or other instrument, together with all amendments or clarifications
thereto, and a true, complete and correct summary of the terms and conditions of
each oral agreement, identified in the Disclosure Schedule. If access is
restricted due to a term in the agreement or by Applicable Law, each Business
Entity shall use its Best Efforts to secure consent from the other party(ies) to
the agreement to provide such access prior to Closing with sufficient time for
Buyer review. Buyer will treat the documents and other material and information
referred to in this Section 7.3 in compliance with Section 9.9.
7.4 Environmental Transfer Statutes. ▇▇▇▇▇▇ shall comply and cause each of
the Transferred Subsidiaries to comply, at ▇▇▇▇▇▇' sole cost and expense, with
all obligations, requirements or responsibilities under New Jersey's Industrial
Sites Recovery Act ("ISRA") or any similar foreign, state, federal, or
provincial statute, each as may be amended ("Environmental Transfer Statute"),
as may be imposed based on the execution and delivery of this Master Agreement
or the Ancillary Agreements or the consummation of the transactions contemplated
thereby. If Remediation is required at any property pursuant to any
Environmental Transfer Statute, whether before or after the Closing, ▇▇▇▇▇▇
shall carry out all such obligations, requirements or responsibilities, in form
and substance reasonably satisfactory to Buyer including, without limitation,
the execution of Remediation Agreement (as defined in ISRA) or similar document.
7.5 Title Insurance. ▇▇▇▇▇▇ shall and shall cause the other Business
Entities to cooperate with Buyer and use their Best Efforts to assist Buyer in
obtaining, at Buyer's cost, good and valid, irrevocable ALTA title insurance
commitments (collectively, the "Title Commitments," and each a "Title
Commitment"), in final form, from one or more title insurance companies
reasonably acceptable to Buyer (collectively, the "Title Company"), irrevocably
committing the Title Company (subject only to the satisfaction of any industry
standard requirements contained in the Title Commitment and reasonably
acceptable to Buyer) to issuing ALTA form of title insurance policies insuring
good, valid, indefeasible fee simple title to the Owned Real Estate located in
the United States in Buyer and, at Buyers' request, similar or equivalent
insurance with respect to the Malaysian Facility, in all cases, in the
respective amounts that Buyer requests prior to Closing, subject to no Liens or
other exceptions to title other than Permitted Liens (collectively, the "Title
Policies") and insuring pedestrian and vehicular access to and from one or more
legally and physically open public rights of way satisfactory to Buyer, in its
sole but reasonable discretion. Each of the Title Commitments shall be effective
as of a date occurring not earlier than the date of this Master Agreement and
the effective dates of each of them shall be brought down to the time of the
Closing. Each such Title Policy shall include such endorsements thereto as may
reasonably be requested by Buyer. On or prior to the Closing Date, the Sellers
shall execute and deliver, or cause to be executed and delivered, to the Title
Company any affidavits, standard gap indemnities and
44
similar documents reasonably requested by the Title Company in connection with
the issuance of the Title Commitments or the Title Policies.
7.6 Surveys. Sellers shall cooperate with Buyer and use their Best Efforts
to assist Buyer in obtaining, at Buyer's cost, no later than fifteen (15) days
prior to Closing, as-built surveys of each parcel of the Owned Real Estate
located in the United States and, at Buyer's request, of the Malaysian Facility
(collectively, the "Surveys") in accordance with (a) the 1997 minimum standard
detail requirements for ALTA/ACSM Land Title Surveys, including, without
limitation, Table A items 2, 3, 4, 6, 7, 8, 9, 10, 11 and 13 and such additional
or different Table A Items as Buyer may, in its discretion, require, (b) with
the Accuracy Standards (as adopted by ALTA and ACSM) of an Urban Survey, and (c)
local standards required by Buyer, in its discretion, dated after the date
hereof, and showing, without limiting the foregoing, with respect to each parcel
of the Owned Real Estate (and the Malaysia Facility, if applicable), all
easements and other appurtenances benefiting and all easements and other
encumbrances burdening such parcel. Each Survey shall be certified to any lender
providing financing to Buyer for the transactions contemplated hereby, the
Buyer, the Title Company and any other person reasonably requested by Buyer and
shall comply with any requirements imposed by the Title Company as a condition
to the removal of any survey exception from the general exceptions to the Title
Policy covering the Owned Real Estate shown on such survey.
7.7 Estoppel Certificates. Promptly following execution of this Master
Agreement, the Sellers shall exercise their, and shall cause the other Business
Entities to cooperate with Buyer and to exercise their, Best Efforts to have
delivered to Buyer prior to the Closing any estoppel certificates and lessor
waivers reasonably determined by Buyer to be necessary to the completion of the
transactions contemplated by this Agreement, in forms reasonably acceptable to
Buyer and ▇▇▇▇▇▇ (the "Estoppel Certificates"), from each lessor under the
Leases.
7.8 Zoning Letters. Sellers shall, at the request of Buyer, reasonably
cooperate with Buyer in attempting to obtain building code and zoning code
compliance letters stating that each parcel of Owned Real Estate complies with
the building and zoning codes applicable thereto and otherwise in form and
substance reasonably satisfactory to Buyer from the Governmental Authorities
having jurisdiction over such matters.
7.9 Foreign Real Estate -- Due Diligence and Assurances. As set forth on
Schedule 4.9(b), some of each of the Owned Real Estate and the Leased Real
Estate is located outside of the United States of America (the "Foreign Owned
Real Estate" and the "Foreign Leased Real Estate," respectively and
collectively, the "Foreign Real Estate"). To the extent that Buyer reasonably
determines that with respect to the Foreign Leased Real Estate, the items
provided for in Sections 7.6 and 7.7 and with respect to the Foreign Owned Real
Estate, the items provided for in any of Sections 7.5, 7.6 and 7.8 are either
insufficient or not practical or desirable to be obtained, then ▇▇▇▇▇▇ shall use
its Best Efforts to help Buyer to obtain reasonable or locally customary due
diligence materials and assurances: (a) of the validity and marketability of the
Sellers' or Transferred Subsidiaries' fee or leasehold title to such Foreign
Real Estate, as appropriate, and (b) that Buyer or Transferred Subsidiaries,
from and after the Closing, shall be able to operate the subject Foreign Real
Estate and conduct the Business thereon as currently conducted and consistent
with past practice.
45
7.10 No Shop. During the period from the date hereof until the Closing or
until this Master Agreement is terminated in accordance with its terms, ▇▇▇▇▇▇
will not, and will not authorize or permit any of its officers, directors,
affiliates or representatives to, take, directly or indirectly, any action with
respect to the Business to initiate, assist, solicit, negotiate, encourage,
accept or otherwise pursue any offer or inquiry from any person or entity (a) to
engage in any Business Combination (as defined below) other than the
transactions contemplated by the Transaction Documents or (b) to reach any
agreement or understanding (whether or not such agreement or understanding is
absolute, revocable, contingent or conditional) for, or otherwise attempt to
consummate, any Business Combination other than the transactions contemplated by
the Transaction Documents. For purposes hereof, "Business Combination" means any
(i) merger, consolidation, sale of assets, business combination or similar
transaction to which ▇▇▇▇▇▇ or any or all of the Business Entities is a party
relating to any or all of the Business, its assets or any interest therein, or
(ii) any sale or other disposition of capital stock of or other equity interests
in any of ▇▇▇▇▇▇' Subsidiaries which comprise any portion of the Business or any
sale, dividend or other disposition of all or any material portion of the assets
and properties of any or all of the Business.
ARTICLE 8
COVENANTS OF BUYER AND PARENT
8.1 Investigation. In conducting their review of the Business, each of
Buyer and Parent shall conduct itself so as to not unreasonably interfere with
the Business or with the performance of any Business Entity's employees.
8.2 Assistance with Respect to Excluded Assets. Following the Closing Date,
upon request of ▇▇▇▇▇▇, Buyer and Parent will use their commercially reasonable
efforts to assist in connection with the collection of any royalties with
respect to any Retained License Agreements. To the extent Buyer or Parent
receives payment in respect of such items following the Closing Date, Buyer or
Parent shall promptly pay such amounts to ▇▇▇▇▇▇.
8.3 Names and Logo. Promptly after the Closing Date, Buyer shall, or shall
cause its Subsidiaries to, amend the certificate of incorporation (or other
charter documents) of each Transferred Subsidiary whose name includes ▇▇▇▇▇▇, or
any derivative thereof, to change the name of each such Subsidiary to a name
that does not include such name and is not confusingly similar therewith. Within
a reasonable time after the Closing Date, Buyer shall, or shall cause its
Subsidiaries to, revise product literature, change signage and stationery, and
discontinue the use of the logo "▇▇▇▇▇▇" except as permitted in the ▇▇▇▇▇▇
Trademark License Agreement.
8.4 Space Used by ▇▇▇▇▇▇ ESS. Following the Closing Date, ▇▇▇▇▇▇ shall be
entitled to continue to occupy the space in the Manufacturing Facilities in Palm
Bay, Florida ("Palm Bay, Florida ▇▇▇▇▇▇▇▇") (▇▇▇▇▇▇▇▇ ▇▇) ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, currently used by the ▇▇▇▇▇▇ electronic systems business on mutually
agreeable terms that shall provide for a pass-through equivalent to ▇▇▇▇▇▇ of
the costs of such occupancy and use, pursuant, in each case, to a written lease
or other written agreement executed by Buyer, or the appropriate Transferred
Subsidiary, and by ▇▇▇▇▇▇, or one of its Subsidiaries, at or prior to Closing
and in form and substance reasonably acceptable to each party thereto
(collectively, the "Leaseback Agreements").
46
8.5 Reimbursement and Indemnity for Certain Costs and Liabilities.
a. On or immediately after the Closing Date, Buyer shall reimburse
▇▇▇▇▇▇ for all documented, third-party expenses and capital contributions
incurred or made after the date hereof by ▇▇▇▇▇▇ on Parent's or Buyer's behalf
in connection with the organization of direct or indirect subsidiaries of Buyer
or the organization or establishment of employee and benefit plans of Parent or
Buyer or similar organization expenses.
b. Buyer and Parent shall indemnify and hold Sellers harmless from any
cost or expense including Taxes or Transfer Taxes arising as a result of the
conversion of ▇▇▇▇▇▇ Semiconductor, Inc., and ▇▇▇▇▇▇ Semiconductor (Ohio), Inc.
into limited liability companies and from the merger of ▇▇▇▇▇▇ Semiconductor
(Pennsylvania), Inc. into a limited liability company, except to the extent
otherwise provided in Section 3.15.
ARTICLE 9
COVENANTS OF ALL PARTIES
9.1 Commercially Reasonable Efforts. Subject to the terms and conditions of
this Master Agreement, each party agrees, both before and after the Closing to
use all commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or desirable under
Applicable Law and the terms of this Master Agreement to consummate the
transactions contemplated by this Master Agreement, including the execution and
delivery of any further instruments or documents of any kind which are
reasonably requested by a party or its counsel to any party signatory hereto in
order to evidence or facilitate the consummation of the transactions
contemplated hereby.
9.2 HSR Filing; Other Filings.
(a) Not later than June 15, 1999, and pursuant to the applicable
requirements of the HSR Act and the rules and regulations thereunder, the
parties shall cause to be filed with the Federal Trade Commission and the
Antitrust Division of the Department of Justice all requisite documents and
notifications in connection with the transactions contemplated by this Master
Agreement. The parties shall diligently and expeditiously comply with the HSR
Act in connection with securing all necessary approvals or waivers thereunder
and shall each use its reasonable best efforts to obtain an early termination of
the applicable waiting period.
(b) The parties shall cooperate with one another (i) in determining
whether any other action by or in respect of, or filing with, any Governmental
Authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any Material Contracts, in connection
with the consummation of the transactions contemplated by this Master Agreement
and (ii) in taking such actions or making any such filings, in furnishing such
information as may be required in connection therewith, and in seeking timely to
obtain any such actions, consents, approvals or waivers.
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9.3 Public Announcements. None of Buyer, Parent, the Business Entities nor
any of their Affiliates will issue any press release or make any public
statement with respect to this Master Agreement or the transactions contemplated
hereby, or disclose the existence of this Master Agreement to any Person or
entity, prior to the Closing and, after the Closing, will not issue any such
press release or make any such public statement without the prior consent of the
other party (which consent shall not be unreasonably withheld or delayed),
subject to any applicable disclosure obligations pursuant to Applicable Law
(including the parties' requirement to issue a press release promptly after the
execution of this Master Agreement and ▇▇▇▇▇▇'▇ obligation to file a Form 8-K
with the U.S. Securities and Exchange Commission), provided that the party
proposing to issue any press release or similar public announcement or
communication in compliance with any such disclosure obligations shall use
commercially reasonable efforts to consult in good faith with the other party
before doing so.
9.4 Consents; Cooperation. The parties will use their respective Best
Efforts, and ▇▇▇▇▇▇ will cause the other Business Entities to use their
respective Best Efforts:
(a) to obtain prior to the earlier of the date required (if so
required) or the Closing Date, all authorizations, consents, orders, permits or
approvals of, or notices to, or filings, registrations or qualifications with,
all Governmental Authorities and any other Person or entity that are required on
their respective parts, for the consummation of the transactions contemplated by
this Master Agreement;
(b) to defend, consistent with applicable principles and requirements
of law, any lawsuit or other legal proceeding, whether judicial or
administrative, whether brought derivatively or on behalf of third Persons
(including Governmental Authorities) challenging this Master Agreement or the
transactions contemplated hereby;
(c) to furnish to each other such information and assistance as may
reasonably be requested in connection with the foregoing; and
(d) to reasonably assist each other as necessary with regard to the
determination of contract or order closeouts or other issues which affect the
Assumed Contract Obligations, to notify Buyer of additional disallowances or
potential adverse audit findings, and to consult and reach agreement with
respect to advanced coordination of negotiating positions, offers of compromise,
or final agreements or settlements, all such cooperation to be without charge to
both parties to this Master Agreement.
9.5 Communications with Customers and Suppliers. ▇▇▇▇▇▇ agrees, in
consultation with Buyer, to promptly notify suppliers and customers of the
Business of the consummation of the transactions contemplated by this Master
Agreement and to reasonably assist Buyer, at Buyer's expense, in making
arrangements with such customers for the payment of Buyer's accounts receivable
in a manner satisfactory to Buyer.
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9.6 Liability for Transfer Taxes.
(a) Parent and Buyer, on the one hand, and ▇▇▇▇▇▇, on the other hand,
shall share equally in the payment of all sales, use, value added, documentary,
stamp, gross receipts, registration, transfer, conveyance, excise, recording,
license and other similar Taxes and fees (for the avoidance of doubt, exclusive
of any Income Taxes) ("Transfer Taxes") arising out of or in connection with or
attributable to the transactions contemplated by this Master Agreement, except
that Sellers shall pay any and all Transfer Taxes relating to the China
subsidiaries, as provided in Section 9.12. Each party hereto shall prepare and
timely file all Tax Returns required to be filed in respect of Transfer Taxes
that are the primary responsibility of such party under Applicable Law,
provided, however, that such parties' preparation of any such Tax Returns shall
be subject to the other parties' approval which approval shall not be
unreasonably withheld, conditioned or delayed, and provided further, that if any
value added tax is paid by the parties and such tax is subsequently recovered,
the recovery shall also be shared equally between Parent and Buyer, in the one
hand, and ▇▇▇▇▇▇ on the other.
(b) The Transferred Assets are composed of (i) assets as to which the
"isolated, casual or occasional sale" exemption or similar exemption from
Transfer Taxes is or may be applicable and (ii) other assets as to which other
exemptions from Transfer Taxes are or may be applicable. In order to obtain any
exemption or favorable tax rate, the parties shall, to the extent consistent
with Applicable Law, provide the other parties with any exemption or resale
certificate, permit, license or such other documentation as may be required by
any taxing authority to establish the right to such exemption or tax rate.
9.7 Tax Matters.
9.7.1 Tax Returns.
(a) All tax sharing agreements, arrangements, policies and guidelines,
formal or informal, express or implied, that may exist between the Transferred
Subsidiaries, or between one or more of the Transferred Subsidiaries and ▇▇▇▇▇▇
and/or any other Person, and any obligations thereunder, shall terminate as of
the Closing Date, and none of the Transferred Subsidiaries shall have any
liability thereunder for any and all amounts due in respect of periods ending on
or before the Closing Date.
(b) ▇▇▇▇▇▇ shall timely prepare and file (or cause to be prepared and
filed) all Tax Returns of the Transferred Subsidiaries for taxable periods that
end on or before the Closing Date and all other Tax Returns of the Transferred
Subsidiaries required to be filed on or before the Closing Date. ▇▇▇▇▇▇ shall
timely pay (or cause to be paid) all Taxes shown as due and payable on such Tax
Returns.
(c) ▇▇▇▇▇▇ shall be the sole and exclusive agent of the Transferred
Subsidiaries in any and all matters relating to the U.S. Federal income tax
liability of the consolidated group of which ▇▇▇▇▇▇ is the common parent (the
"Seller Consolidated Group") for all consolidated return years. ▇▇▇▇▇▇ shall,
inter alia, have the right with respect to any Federal consolidated returns
which it files (i) to determine (x) the manner in which such returns shall be
prepared and
49
filed, including, without limitation, the manner in which any item of income,
gain, loss, deduction or credit shall be reported, (y) whether any extensions of
the due dates for filing of such returns or of the applicable statutes of
limitations may be requested and (z) the elections that will be made by any
member of Seller Consolidated Group, (ii) to file and prosecute any claim for
refund, and (iii) to determine whether any refunds, to which Seller Consolidated
Group may be entitled, shall be paid by way of refund or credited against the
tax liability of Seller Consolidated Group. Prior to the Closing, ▇▇▇▇▇▇ will
cause the Transferred Subsidiaries to irrevocably appoint ▇▇▇▇▇▇ as agent and
attorney-in-fact to take such action (including the execution of documents) as
▇▇▇▇▇▇ may deem appropriate to effect the foregoing.
(d) ▇▇▇▇▇▇ shall have the sole right (but not the obligation), at its
sole expense and for its sole benefit, to prepare and file or cause to be
prepared and filed any amended Tax Return, or claim for refund, and to prosecute
any claim for refund, with respect to any Taxes paid or payable by the
Transferred Subsidiaries with respect to periods ending on or prior to the
Closing Date.
(e) Buyer shall timely prepare and file (or cause to be prepared and
filed) all Tax Returns of the Transferred Subsidiaries for taxable years or
periods ending after the Closing Date and shall pay (or cause to be paid) the
Taxes shown to be due on any such return. Upon notification and satisfactory
documentation from Buyer at least fifteen days prior to the due date of such
return, ▇▇▇▇▇▇ shall pay to Buyer the Taxes paid with such return that ▇▇▇▇▇▇ is
liable for pursuant to Section 9.7.2(b) of this Master Agreement. Following the
Closing Date, Buyer shall not cause or permit any of the Transferred
Subsidiaries formed or incorporated in jurisdictions other than a state of the
United States or in Malaysia to pay any dividend, or make any other
distribution, during the taxable year that includes the Closing Date, that would
affect the liability of Sellers for Taxes in respect of periods prior to the
Closing Date.
(f) Buyer shall have the sole right (but not the obligation), at its
sole expense and for its sole benefit (except as provided in Section 9.7.2(b)
hereof), to prepare and file (or cause to be prepared and filed) any amended Tax
Return, or claim for refund, and to prosecute any claim for refund, with respect
to any Taxes paid or payable by the Transferred Subsidiaries with respect to
periods ending after the Closing Date.
9.7.2 Indemnity.
(a) ▇▇▇▇▇▇ hereby agrees to indemnify and hold the Transferred
Subsidiaries (and Buyer or any Affiliate thereof) harmless with respect to any
Tax Liability of Seller Consolidated Group where such Liability arises solely by
reason of any of the Transferred Subsidiaries being severally liable for any
Taxes of Seller Consolidated Group pursuant to Treas. Reg. ss. 1.1502-6 or any
similar provision of foreign, state or local law.
(b) ▇▇▇▇▇▇ shall indemnify and hold Buyer harmless from and against,
and pay and reimburse Buyer for, any and all Taxes of the Seller Consolidated
Group or any member thereof, or of any other Transferred Subsidiary (other than
Assumed Pre-Closing Taxes) for any taxable year or period ending on or before
the Closing Date and the portion of any such Taxes for any taxable year or
period ending thereafter that is attributable to the portion of such year or
50
period prior to and including the Closing Date, and ▇▇▇▇▇▇ shall be entitled to
all refunds of such Taxes.
(c) Buyer shall indemnify and hold ▇▇▇▇▇▇ harmless from and against,
and pay and reimburse ▇▇▇▇▇▇ for, any and all Taxes due by the Transferred
Subsidiaries or any affiliated group of which the Transferred Subsidiaries
become members after the Closing Date for any Taxable year or period beginning
on or after the Closing Date and the portion of any such Taxes for any period
beginning before and ending after the Closing Date that is attributable to the
portion of such year or period beginning after the Closing Date, and Buyer shall
be entitled to all refunds of such Taxes.
(d) Notwithstanding anything in this Master Agreement to the contrary,
all of indemnity obligations set forth in this Section 9.7.2 shall terminate and
expire, and shall cease to be of any force or effect, at 5:00 P.M. (Florida
time) thirty (30) days after the expiration of the applicable statutes of
limitation, including waivers and extensions thereof, and all liabilities with
respect to the obligations set forth in this Section 9.7.2 shall thereupon be
extinguished; provided, however, that to the extent a written notice asserting
any claim for indemnification hereunder shall have been given prior to such date
to the Tax Indemnitor, obligations relating to such claim shall survive, until
such claim is fully resolved.
9.7.3 Tax Liability. Whenever it is necessary for purposes of this
Section 9.7 to determine the Tax Liability of the Transferred Subsidiaries for a
taxable year or period that begins before and ends after the Closing Date, the
determination shall be made by assuming that the entity had a Taxable year that
ended at the close of the Closing Date and by using the accounting practices and
procedures previously used by ▇▇▇▇▇▇ in preparing its Tax Returns, provided that
(a) exemptions, allowances or deductions that are calculated on an annual basis,
such as the deduction for depreciation, shall be apportioned on a time basis,
(b) Taxes (other than income taxes) that are determined based upon specific
transactions (including but not limited to value added, sales, and use Taxes)
shall be allocated in accordance with the timing of such specific transactions,
and (c) responsibility for real estate, personal property, license, franchise,
doing business, and similar Taxes (but not including any Taxes based on income)
shall be pro rated as of the Closing Date as set forth on the Final Closing
Balance Sheet.
9.7.4 Tax Contests.
(a) The party obliged to provide indemnification under this Section 9.7
(the "Tax Indemnitor") shall assume and direct the defense or settlement of any
hearing, arbitration, suit or other proceeding (each a "Tax Contest") commenced,
filed or otherwise initiated or convened to investigate or resolve the existence
and extent of a liability with respect to which the Tax Indemnitor would have an
indemnification obligation under this Section 9.7 ("Tax Indemnification
Liability"). The party entitled to be indemnified under this Section 9.7 (the
"Tax Indemnified Party") shall have the right to participate, as its own cost
and expense, in the defense of such Tax Contest, it being understood that the
Tax Indemnitor shall control such Tax Contest.
(b) The Tax Indemnitor shall pay all out-of-pocket expenses and other
costs related to the Tax Indemnification Liability, including but not limited to
reasonable fees for attorneys, accountants, expert witnesses or other
consultants retained by the Tax Indemnitor
51
and/or Tax Indemnified Party (other than fees for attorneys, accountants, expert
witnesses or other consultants retained solely by the Tax Indemnified Party),
and incurred at any time during which the Tax Indemnitor is controlling and
directing the Tax Contest in respect of which such fees are incurred. To the
extent that any such expenses and other costs have been or are paid by a Tax
Indemnified Party, the Tax Indemnitor shall promptly reimburse the Tax
Indemnified Party therefor.
(c) Any Tax Indemnified Party shall give written notice to the Tax
Indemnitor of any settlement proposed by the Taxing authority. The Tax
Indemnitor shall have the right, in its sole discretion, to settle any claim for
which indemnification has been sought under this Section 9.7; provided, however,
that the Tax Indemnitor shall not enter into any settlement, closing agreement
or other agreement with respect to any Tax liability with respect to the
Business, the Transferred Assets or the Transferred Subsidiaries without the
prior written consent of the Tax Indemnified Party (such consent not to be
unreasonably withheld or delayed) if such settlement, closing agreement or other
agreement will adversely affect Taxes payable by the Tax Indemnified Party for
taxable periods or portions thereof beginning on or after the Closing Date.
9.7.5 Cooperation.
(a) ▇▇▇▇▇▇ and Buyer shall provide each other with such assistance and
documents, without charge and in a timely fashion, as may be reasonably
requested by either of them in connection with (i) the preparation of any Tax
Return (including any amended Tax Return), (ii) the conduct of any Tax Contest,
or (iii) any other matter that is the subject of this Master Agreement. Such
assistance shall include, without limitation: (i) the provision on demand of
books, records, Tax Returns, documentation or other information relating to any
relevant Tax Return ("Tax Data"); (ii) the execution of any document that may be
necessary or reasonably helpful in connection with the filing of any Tax Return,
or in connection with any Tax Contest, including, without limitation, the
execution of powers of attorney and extensions of applicable statutes of
limitations; and (iii) the use of reasonable efforts to obtain any documentation
from any Governmental Authority or other Person that may be necessary or
reasonably helpful in connection with the foregoing. Such cooperation shall
include, without limitation, making their respective employees and independent
auditors reasonably available on a mutually convenient basis for all reasonable
purposes, including, without limitation, to provide explanations and background
information and to permit the copying of books, records, schedules, workpapers,
notices, revenue agent reports, settlement or closing agreements and other
documents containing the Tax Data ("Tax Documentation"). If either party
reasonably determines that the other party is not in compliance with this
Section, the party reaching such conclusion shall have the right to retain a
third party to obtain the necessary documentation and other assistance
contemplated by this Section at the expense of the party which is not in
compliance.
(b) ▇▇▇▇▇▇ and each other member of Seller Consolidated Group and
▇▇▇▇▇▇' Affiliates, and Buyer and the Transferred Subsidiaries, shall retain or
cause to be retained the Tax Data, the Tax Documentation, all Tax Returns,
schedules and workpapers, and all material records or other documents relating
thereto, until one year after the expiration of all applicable statutes of
limitations (including any waivers or extension thereof) with respect to the
Taxable
52
periods to which such Tax Returns and other documents relate or until the
expiration of any additional period that either Buyer or Seller, as the case may
be, may reasonably request in writing with respect to specifically designated
material records or documents; provided, however, that in the event an audit,
examination, investigation or other proceeding has been instituted prior to the
expiration date of an applicable statute of limitations, the Tax Data and Tax
Documentation relating thereto shall be retained until there is a final
determination thereof (and the time for any appeal has expired). After the
expiration of the time when the Tax Data and the Tax Documentation must be
retained pursuant to this Section 9.7.5(b), then any such material may be
destroyed. ▇▇▇▇▇▇ shall give Buyer not less than thirty (30) days prior written
notice before Tax Data or Tax Documentation in the possession or control of any
member of the Seller Consolidated Group or other ▇▇▇▇▇▇ Affiliate is destroyed
and shall give Buyer an opportunity to copy any such material during such thirty
(30) day period. Buyer shall give ▇▇▇▇▇▇ not less than thirty (30) days prior
written notice before any Tax Data or Tax Documentation in the possession or
control of Buyer or any Transferred Subsidiary is destroyed and shall give
▇▇▇▇▇▇ an opportunity to copy any such material during such thirty (30) day
period.
(c) In order to assist ▇▇▇▇▇▇ in the preparation of Sellers' Tax
Returns, Buyer will report to Seller on a calendar quarterly basis payments made
by Buyer on or after the Closing Date with respect to the accrued vacation
liability assumed by Buyer at Closing. Buyer and Seller agree that vacation is
taken on a FIFO basis. Such reports will be prepared on a FIFO basis every
calendar quarter and for each two and a half month period after each calendar
year until the accrued vacation liability is extinguished.
9.7.6 Transfer Pricing Agreements and Related Documentation. Sellers
will supply Buyer with a copy of all closing or other agreements related to the
Business entered into with the Internal Revenue Service, the Malaysian taxing
authorities, or any other state, local or foreign taxing authorities relating in
whole or in part to Code Section 482 or any other comparable transfer pricing
provision set forth under state, local or foreign tax law that arise from any
transaction between (i) ▇▇▇▇▇▇ Malaysia or any other Business Entity with (ii)
any other Business Entity or with the Business, and Sellers will use their Best
Efforts to supply, with respect thereto, any supporting documentation including,
but not limited to, any transfer pricing or economic studies obtained for, or in
anticipation of, any such proceeding.
9.8 Tax Elections. No material new elections with respect to Taxes, or any
material changes in current elections with respect to Taxes, affecting the
Transferred Assets or the Transferred Subsidiaries for periods including the
Closing Date that will have a material adverse effect on Taxes as to which
▇▇▇▇▇▇ indemnifies Buyer under this Master Agreement shall be made after the
date of this Master Agreement, with respect to the taxable year which includes
the Closing Date, without the prior written consent of both ▇▇▇▇▇▇ and Buyer.
9.9 Confidentiality.
(a) For a period of five years after the Closing Date, ▇▇▇▇▇▇ agrees
that it will keep confidential all of Buyer's Proprietary Information and Buyer
and Parent agree that they will keep confidential all of Sellers' Proprietary
Information except that Buyer and Parent shall not be required to keep
confidential Proprietary Information relating to the Business and
53
conveyed to Buyer as part of the Transferred Assets; such Proprietary
Information shall include any Proprietary Information obtained in connection
with the Ancillary Agreements. The obligation of each party to keep such
Proprietary Information confidential shall not apply to any information which
(i) is or becomes available to such party from a source other than the other
party (or any Person who is bound by a confidentiality agreement with such other
party with respect to such information), (ii) is or becomes available to the
public other than as a result of disclosure by such party or its agents, or
(iii) is required to be disclosed under Applicable Law or judicial process;
provided, however, that if a party is requested or becomes legally compelled (by
oral questions, interrogatories, requests for information or documents,
subpoenas, civil investigative demand or similar process) to disclose any of
such information, to the extent permitted by law, such party will provide the
other party with prompt written notice to, and will cooperate with, such other
party so that such other party may seek a protective order or other appropriate
remedy; provided, further, that in the event such other party waives compliance
with the provisions of this Section 9.9, such party shall disclose only that
portion of the confidential information which is legally required and will
exercise its Best Efforts to seek confidential treatment for such information.
Notwithstanding anything in this Section 9.9 to the contrary, in the event that
any such information is also subject to a limitation on disclosure or use
contained in another written agreement between Buyer and Seller which is more
restrictive than the limitation contained in this Section 9.9, then the
limitation in such agreement shall supersede this Section 9.9.
(b) Buyer acknowledges that, in obtaining copies of personnel-related
records, it understands that certain of this information is confidential as a
matter of state and/or federal law. Buyer further agrees to maintain (and
disclose, if at all) such information in compliance with Applicable Law.
9.10 Books and Records. Subject to the confidentiality provisions hereof,
▇▇▇▇▇▇ shall have the right to retain copies of the Books and Records. From and
after the Closing and until the sixth anniversary thereof, (a) each Seller
agrees to grant to Buyer, upon reasonable notice and during normal business
hours, reasonable access to any books and records that pertain to the Business,
but which are not Books and Records, and (b) Buyer and Parent agree to grant to
▇▇▇▇▇▇, upon reasonable notice and during normal business hours, reasonable
access to any Books and Records included in the Transferred Assets that pertain
to the operations of the Business on or prior to the Closing Date.
9.11 Ancillary Agreements. Following the Closing Date, ▇▇▇▇▇▇ and Buyer
will perform, or cause to be performed, their respective obligations under the
Ancillary Agreements.
9.12 Obligations Concerning China Subsidiaries.
(a) On or prior to the Closing Date, ▇▇▇▇▇▇ Malaysia shall transfer
its beneficial interest, and agree to transfer its title, in the shares of the
China Subsidiaries to HAS. ▇▇▇▇▇▇ Malaysia shall enter into purchase agreements
(the "China Purchase Agreements") with HAS providing for such transfers. The
China Purchase Agreements shall provide that any Net Proceeds realized from the
ownership, sale, rental or other disposition of the assets or stock of any of
the China Subsidiaries shall be paid to HAS. For purposes of this Section
9.12(a), Net
54
Proceeds shall mean any proceeds realized from any such ownership, sale, rental,
or other disposition net of all of expenses and other Liabilities associated
with such ownership, sale, rental or other disposition and net of all Taxes,
including Transfer Taxes and taxes imposed by the People's Republic of China and
by the Republic of Malaysia, in connection with such ownership, sale, rental or
other disposition and in connection with the distribution of the proceeds of
such ownership, sale, rental or other disposition to ▇▇▇▇▇▇ Malaysia and the
further distribution to HAS.
(b) The China Purchase Agreements shall appoint HAS as ▇▇▇▇▇▇
Malaysia's exclusive agent for purposes of exercising ▇▇▇▇▇▇ Malaysia's rights
as a shareholder in any of the China Subsidiaries and selling the equity of, or
liquidating, any of the China Subsidiaries, as HAS shall, in its sole
discretion, determine. The China Purchase Agreements shall require ▇▇▇▇▇▇
Malaysia to cause each of the China Subsidiaries to appoint HAS as each China
Subsidiary's exclusive agent for purposes of selling or renting the assets of
such China Subsidiary, as HAS shall, in its sole discretion, determine. Buyer
shall cause ▇▇▇▇▇▇ Malaysia and each China Subsidiary to take any and all
actions reasonably requested by ▇▇▇▇▇▇, at ▇▇▇▇▇▇' expense, to support the
foregoing including any actions reasonably requested by ▇▇▇▇▇▇ in order to
distribute to ▇▇▇▇▇▇ Malaysia any proceeds realized from the sale or rental of
the assets of such China Subsidiary. Subject to the provisions of this Master
Agreement, such proceeds shall be for the account of HAS. ▇▇▇▇▇▇ agrees that,
provided ▇▇▇▇▇▇ Malaysia cooperates, it will use Best Efforts to arrange for and
consummate the transfer to HAS of title to the shares of Anshan ▇▇▇▇▇▇ and
Guangzhou ▇▇▇▇▇▇ within six months of the Closing Date. ▇▇▇▇▇▇ agrees that it
will arrange for and consummate the sale, liquidation or other disposition of
all of the China Subsidiaries or the assets thereof or the transfer to HAS of
title to the shares of such China Subsidiaries within two (2) years of the
Closing Date.
(c) In connection with the power and authority to be granted to HAS
pursuant to the China Purchase Agreements and this Section 9.12, ▇▇▇▇▇▇ agrees
to pay, and to indemnify, defend and hold harmless ▇▇▇▇▇▇ Malaysia and Buyer
from, all costs, losses, Liabilities, claims and expenses (excluding any loss of
investment value in the China Subsidiaries) related to, or in any way resulting
from, (i) the ownership or transfer by ▇▇▇▇▇▇ Malaysia of any China Subsidiary,
or (ii) the ownership or operation or transfer by any China Subsidiary of its
assets, including any Taxes incurred by ▇▇▇▇▇▇ Malaysia in connection with such
ownership, operation or transfer (including all Transfer Taxes) and any
contributions or payments ▇▇▇▇▇▇ Malaysia or Buyer is legally obligated to make
in connection with such ownership provided that any Taxes or other expenses or
Liabilities arising as a result of the sale of any China Subsidiary or the
distribution of funds from any China Subsidiary as a result of liquidation or
otherwise shall be paid, in the first instance, from such proceeds or
distributions. The indemnification obligations of ▇▇▇▇▇▇ under this Section
9.12(c) shall be in addition to those obligations set forth in this Master
Agreement, including those set forth under Section 9.7.2 hereof, and shall not,
in any event, be considered indemnification obligations of Buyer under this
Master Agreement.
9.13 Latham Lease. ▇▇▇▇▇▇ is the lessee under a certain Lease Agreement
dated November 18, 1992 with ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Associates, as lessor, as
amended by Amendments First through Seventh thereof dated January 8, 1993,
January 26, 1993, August 1, 1993, March 25, 1994, November 1, 1995, March 1,
1996 and January 1, 1998, respectively, for space in the building commonly known
as ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ of Colonie,
55
County of Albany, NY (the "Latham Lease"). Pursuant and subject to a certain
Assignment and Assumption of Lease (the "Latham Lease Assignment") dated as of
November 2, 1998, ▇▇▇▇▇▇ has assigned the ▇▇▇▇▇▇ Lease to Silicon Power
Corporation, a Pennsylvania Corporation. Buyer and Sellers agree that the ▇▇▇▇▇▇
Lease shall at Buyer's election be (i) transferred to Buyer and constitute a
Transferred Asset, or (ii) retained by ▇▇▇▇▇▇ and constitute an Excluded Asset.
If Buyer elects to have the ▇▇▇▇▇▇ Leased assigned to it, then (a) the ▇▇▇▇▇▇
Lease shall constitute one of the Leases, (b) the real estate demised thereby
shall constitute Leased Real Estate, (c) Schedule 4.11(m) shall be deemed to
include the ▇▇▇▇▇▇ Lease, (d) the ▇▇▇▇▇▇ Lease and the ▇▇▇▇▇▇ Lease Assignment
shall constitute Assumed Contract Obligations, and (e) Schedule 4.11(l) shall be
deemed to include the ▇▇▇▇▇▇ Lease Assignment. If Buyer does not elect to have
the ▇▇▇▇▇▇ Lease assigned to it, the ▇▇▇▇▇▇ Lease, the real estate demised
thereby and the ▇▇▇▇▇▇ Assignment shall constitute Excluded Assets and Excluded
Liabilities for all purposes.
9.14 Ownership of Intersil Name. Parent and Buyer hereby acknowledge and
agree that the name "Intersil" is owned by ▇▇▇▇▇▇ until the Closing at which
time the ownership of such name shall pass to Parent and Buyer. ▇▇▇▇▇▇ agrees
that Parent and Buyer have a limited and nontransferable license to use such
name in their respective corporate names. Such license shall terminate in the
event the Master Agreement is terminated. Upon the occurrence of such event,
Buyer and Parent shall have no further rights in and to the name "Intersil" and
shall promptly amend their respective charters to remove such name from their
respective corporate names."
ARTICLE 10
CONDITIONS TO OBLIGATIONS OF BUYER AND PARENT TO CLOSE
The obligations of Buyer and Parent to purchase the Transferred Assets and
otherwise consummate the transactions that are to be consummated at the Closing
are subject to the satisfaction, as of the Closing Date, of the following
conditions (any of which may be waived by Buyer and Parent, in their sole
discretion, in whole or in part):
10.1 Accuracy of Representations and Warranties. The representations and
warranties of Sellers set forth in Article 4 shall be true and correct in all
material respects (or, for representations and warranties that have any
materiality qualifiers, in all respects) as of the date of this Master Agreement
and as of the Closing, as though made on and as of the Closing Date, except to
the extent that any of such representations and warranties refers specifically
to a date other than the Closing Date, in which case such representation or
warranty shall have been accurate in all material respects (or, for
representations and warranties that have any materiality qualifiers, in all
respects) as of such other date, and all representations and warranties of
Sellers contained in the Ancillary Agreements shall be true and correct in all
material respects (or, for representations and warranties that have any
materiality qualifiers, in all respects) at and as of the Closing Date.
10.2 Performance. ▇▇▇▇▇▇ shall have, and shall have caused each Business
Entity to have, performed and satisfied in all material respects all agreements,
covenants and obligations required by this Master Agreement to be performed by
Buyer or Parent or any Business Entity on or before the Closing Date.
56
10.3 No Conflict. The transactions contemplated by this Master Agreement
and the consummation of the Closing shall not be illegal or prohibited under any
Applicable Law. No temporary restraining order, preliminary or permanent
injunction, cease and desist order or other order issued by any court of
competent jurisdiction or any competent Governmental Authority or any other
legal restraint or prohibition preventing the transfer contemplated hereby or
the consummation of the Closing, or imposing Condition-Triggering Losses in
respect thereto, shall be in effect, and there shall be no pending or threatened
actions or proceedings by any Governmental Authority (or determinations by any
Governmental Authority) that result, or would reasonably be expected to result,
in Condition-Triggering Losses.
10.4 Material Adverse Change. From the date of this Master Agreement, no
change that will have a Material Adverse Effect on the Business shall have
occurred.
10.5 Certificate. Buyer shall have received from a duly authorized officer
of each Seller a certificate dated the Closing Date confirming that the
conditions in Sections 10.1 and 10.2 have been met.
10.6 HSR Act. Any applicable waiting period under the HSR Act relating to
the transactions contemplated hereby shall have expired or been terminated.
10.7 Consents. All approvals, consents, waivers and authorizations required
to be obtained by Sellers in connection with the transactions contemplated by
this Master Agreement that are identified on Schedule 10.7, including without
limitation any authorizations, consents, orders, permits, approvals or
notifications required under Environmental Laws necessary for the operation of
the Business, shall have been obtained and shall be in full force and effect,
except where the failure to obtain such consents did not and would not
reasonably be expected to result in Condition-Triggering Losses.
10.8 Transfer Documents. ▇▇▇▇▇▇ shall, and shall have caused each Seller
to, have delivered to Buyer at the Closing all documents, certificates and
agreements necessary to transfer to Buyer title to the Transferred Assets and,
in the case of the Real Estate, good and marketable fee simple title to the
Owned Real Estate (or the practical equivalent with respect to the Malaysia
Facility) and good and valid leasehold title with respect to the Leased Real
Estate (other than the Retained Leased Real Estate) free and clear of any and
all Liens thereon, other than Permitted Liens, including, without limitation:
(a) bills of sale, limited warranty deeds, assignments and general
conveyances, in form and substance reasonably satisfactory to Buyer, dated the
Closing Date, with respect to the Transferred Assets other than Transferred
Assets owned by the Transferred Subsidiaries;
(b) certificates representing all of the outstanding equity of the
Transferred Subsidiaries accompanied by duly executed stock powers;
(c) assignments of all Assumed Contract Obligations and any other
agreements and instruments constituting Transferred Assets (other than such
Transferred Assets
57
owned by the Transferred Subsidiaries), dated the Closing Date, assigning to
Buyer all of each Seller's right, title and interest therein and thereto; and
(d) certificates of title to all owned motor vehicles, if any,
included in the Transferred Assets to be transferred to Buyer hereunder, duly
endorsed for transfer to Buyer as of the Closing Date.
10.9 Transaction Documents. The parties other than Buyer, Parent and their
respective Affiliates shall have entered into the Ancillary Agreements and other
Transaction Documents.
10.10 Resignations. Sellers shall have delivered to Buyer the resignations
of the directors and officers of the Transferred Subsidiaries.
10.11 Corporate Records. Sellers shall deliver or otherwise make available
to Buyer the minute books and corporate records of the Transferred Subsidiaries.
10.12 Further Instruments. Sellers shall deliver to Buyer such further
instruments of assignment, conveyance or transfer or other documents of further
assurance as Buyer may reasonably request.
10.13 Sellers' Counsel Opinion. Buyer shall have received an opinion of
Sellers' counsel in form and substance reasonably acceptable to Buyer.
10.14 Financing. Buyer and Parent shall have secured the proceeds of the
Financing on terms satisfactory to Buyer and Parent, which terms may require
equity of $90,000,000.
10.15 Environmental Transfer Statutes. ▇▇▇▇▇▇ will have complied with the
requirements of Section 7.4 hereof and shall provide evidence of such compliance
in form and substance satisfactory to Buyer prior to the Closing.
10.16 Possession. Sellers shall deliver possession of: (i) the Real Estate,
except for the Retained Leased Real Estate, and (ii) the Subleased Real Estate,
to Buyer.
10.17 Working Capital Amount. The parties shall have agreed on the
normalized working capital amount as contemplated by Section 3.5(b).
10.18 Real Estate Matters. Buyer shall have received the Title Policies.
10.19 Real Property Agreements. Buyer or the appropriate Transferred
Subsidiary (with Buyer's approval) and Sellers shall have fully executed and
entered into all of the Subleases, the Malaysian Purchase Agreement, and the
Leaseback Agreements and there shall be no default under the Malaysian Purchase
Agreement.
10.20 ▇▇▇▇▇▇ Advanced Technology (Malaysia) Sdn Bhd. Sellers shall have
caused the ownership interests of ▇▇▇▇▇▇ Advanced Technology (Malaysia) Sdn Bhd
("▇▇▇▇▇▇ Malaysia")
58
to have been sold to a Business Entity that is a domestic or foreign corporation
(at Buyer's sole discretion). Sellers shall be permitted in their sole
discretion to make the election under Treasury Regulation Section 301.7701-3(c)
as to ▇▇▇▇▇▇ Malaysia and the current owners of its membership interests at any
time prior to the Closing Date, and Buyer and Parent hereby consent to such
election. If such election is made, it shall remain in full force and effect as
of the Closing Date. In the event Sellers do not make such election, Buyer shall
have the right, at its sole discretion, to make an election under Section 338(g)
of the Code with respect to ▇▇▇▇▇▇ Malaysia and the current owners of its
membership interest with Sellers bearing any costs related to the making of such
election. In addition, if mutually satisfactory to both Buyer and Sellers, the
consideration paid for ▇▇▇▇▇▇ Malaysia (and the aggregate consideration to be
paid Sellers pursuant to this Master Agreement) shall be reduced by an amount
equal to that amount that can be borrowed by ▇▇▇▇▇▇ Malaysia on or prior to the
Closing Date, provided such borrowing shall be used to redeem a portion of the
ownership interests in ▇▇▇▇▇▇ Malaysia, with the balance of the ownership
interests in ▇▇▇▇▇▇ Malaysia being sold to Buyer pursuant to the provisions of
this Section 10.19 and this Master Agreement including Section 3.12.
ARTICLE 11
CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇▇ TO CLOSE
The obligation of ▇▇▇▇▇▇ to sell the Transferred Assets and otherwise
consummate the transactions that are to be consummated at the Closing is subject
to the satisfaction, as of the Closing Date, of the following conditions (any of
which may be waived by ▇▇▇▇▇▇, in its sole discretion in whole or in part):
11.1 Accuracy of Representations and Warranties. The representations and
warranties of Buyer and Parent set forth in Article 5 shall be true and correct
in all material respects (or, for representations and warranties that have any,
materiality qualifiers, in all respects) as of the date of this Master Agreement
and as of the Closing, as though made on and as of the Closing Date, except to
the extent that any of such representations and warranties refers specifically
to a date other than the Closing Date, in which case such representation or
warranty shall have been accurate in all material respects (or, for
representations and warranties that have any, materiality qualifiers, in all
respects) as of such other date, and all representations and warranties of Buyer
and Parent contained in the Ancillary Agreements shall be true and correct in
all material respects (or, for representations and warranties that have any
materiality qualifiers, in all respects) at and as of the Closing Date.
11.2 Performance. Each of Buyer and Parent shall have performed and
satisfied in all material respects all agreements, covenants and obligations
required by this Master Agreement to be performed by Buyer or Parent on or
before the Closing Date.
11.3 No Conflict. The transactions contemplated by this Master Agreement
and the consummation of the Closing shall not be illegal or prohibited under any
Applicable Law. No temporary restraining order, preliminary or permanent
injunction, cease and desist order or other order issued by any court of
competent jurisdiction or any competent Governmental Authority or any other
legal restraint or prohibition preventing the transfer contemplated hereby or
the consummation of the Closing, or imposing damages in respect thereto, shall
be in effect, and
59
there shall be no pending or threatened actions or proceedings by any
Governmental Authority (or determinations by any Governmental Authority) that
would reasonably be expected to have a material adverse effect on the
transactions contemplated by this Master Agreement.
11.4 Certificate. ▇▇▇▇▇▇ shall have received from duly authorized officers
of Buyer and Parent a certificate dated the Closing Date confirming that the
conditions in Sections 11.1, 11.2 and 11.3 have been met.
11.5 HSR Act. Any applicable waiting period under the HSR Act relating to
the transactions contemplated hereby shall have expired or been terminated.
11.6 Consents. All approvals, consents, waivers and authorizations required
to be obtained by Buyer or Parent in connection with the transactions
contemplated by this Master Agreement that are identified on Schedule 11.6 shall
have been obtained and shall be in full force and effect, except where the
failure to obtain such consents did not and would not reasonably be expected to
have a material adverse effect on the transactions contemplated by this Master
Agreement.
11.7 Assumption Agreement. ▇▇▇▇▇▇ shall have received from Buyer or Parent,
as appropriate, an Assumption Agreement, in substance and form reasonably
satisfactory to ▇▇▇▇▇▇, under which Buyer or Parent, as appropriate, shall have
assumed the Assumed Liabilities.
11.8 Transaction Documents. The parties other than ▇▇▇▇▇▇ and its
Affiliates shall have entered into the Ancillary Agreements and the other
Transaction Documents.
11.9 Buyer's Counsel Opinion. ▇▇▇▇▇▇ shall have received the opinion of
counsel for Buyer and Parent in form and substance reasonably satisfactory to
▇▇▇▇▇▇.
11.10 Further Instruments. Buyer and Parent shall deliver to ▇▇▇▇▇▇ such
further instruments of assumption or other documents of further assurance as
Sellers may reasonably request.
11.11 Financing. Buyer and Parent shall have secured the proceeds of the
Financing.
11.12 Working Capital Amount. The parties shall have agreed on the
normalized working capital amount as contemplated by Section 3.5(b).
11.13 Royalty Agreement. The parties shall have entered into a mutually
acceptable agreement providing for the payment to ▇▇▇▇▇▇ Semiconductor Patents,
Inc., of a royalty equal to 2% of the revenue generated by the sales of prism
chip sets for a period of five years after the Closing Date.
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ARTICLE 12
TERMINATION
12.1 Right to Terminate Agreement. This Master Agreement may be terminated
prior to the Closing:
(a) by the mutual written agreement of ▇▇▇▇▇▇ and Buyer; or
(b) by written notice by either ▇▇▇▇▇▇ or Buyer at any time after
September 30, 1999 (the "Section 12.1 Date"), if the Closing shall not have
occurred on or prior to such date; provided, however, that the right to
terminate this Master Agreement under this Section 12.1(b) shall not be
available to such party (i) unless such party is expressly entitled to refuse to
close the transactions contemplated by this Master Agreement under Article 10 or
11, as the case may be, or (ii) if the action of such party or any of its
Affiliates has been a principal cause of or resulted in the failure of the
Closing to occur on or before such date and such action or failure to act
constitutes a breach of this Master Agreement. Notwithstanding the foregoing,
the Section 12.1 Date shall be extended as follows: (i) if the Closing does not
occur because one or more of the representations and warranties in Article 4 is
not true as of the Closing Date, ▇▇▇▇▇▇ shall have thirty (30) days to cure such
representation or warranty and the Section 12.1 Date shall be extended until the
expiration of such cure period; (ii) if the Closing does not occur because it is
enjoined by a court of competent jurisdiction or is otherwise prevented as a
consequence of court proceedings, the Section 12.1 Date shall be extended until
such injunction or other court ruling preventing the Closing is vacated or
becomes final and is either nonappealable or the time for any such appeal has
expired without an appeal having been filed; and (iii) if the Closing does not
occur because the approval of the transaction under the HSR Act or foreign
counterparts has not been obtained or the waiting period pursuant to such act
has not expired, the Section 12.1 Date shall be extended until such approval is
obtained or denied, or such waiting period expires. In no event shall the
Section 12.1 Date be extended beyond December 31, 1999.
12.2 Effect of Termination. Upon the termination of this Master Agreement
pursuant to Section 12.1:
(a) Buyer and Parent shall promptly cause to be returned to ▇▇▇▇▇▇ all
documents and information obtained from ▇▇▇▇▇▇ in connection with this Master
Agreement and the transactions contemplated by this Master Agreement and all
documents and information obtained in connection with Buyer's investigation of
the Business, including any copies made by or supplied to Buyer or any of
Buyer's agents of any such documents or information; and
(b) No party hereto shall have any obligation or liability to the
other party hereto, except that the parties hereto shall remain bound by the
provisions of this Section 12.2 and Sections 9.3, 9.5, 9.11 and Article 14 and
by the provisions of the Confidentiality Agreement between Citicorp Venture
Capital and ▇▇▇▇▇▇.
61
ARTICLE 13
CERTAIN REMEDIES AND LIMITATIONS
13.1 Expiration of Representations, Warranties and Covenants. All covenants
set forth in this Master Agreement shall survive the Closing Date. All of the
representations and warranties of Seller set forth in this Master Agreement and
the Ancillary Agreements shall terminate and expire, and shall cease to be of
any force or effect, at 5:00 P.M. (Florida time) on the date that is eighteen
months after the Closing Date, and all liability with respect to such
representations and warranties shall thereupon be extinguished, except as to
matters with respect to which notice of a claim has been given prior to the
expiration of such eighteen month period, provided that the representations and
warranties of Seller set forth in (a) Section 4.18 and Section 4.22 shall
continue in full force and effect until 60 days after all applicable statutes of
limitations, including waivers and extensions, have expired with respect to the
matters addressed therein, (b) Sections 4.13, 4.14 and 4.15 shall survive until
the fifth anniversary of the Closing Date, and (c) Sections 4.1, 4.2, 4.3, and
4.9 shall survive the Closing Date.
13.2 Indemnity by ▇▇▇▇▇▇.
(a) Subject to the provisions of Section 13.1 relating to the survival
of representations and warranties and the other limitations contained herein,
from and after the Closing, ▇▇▇▇▇▇ agrees to indemnify, defend and hold harmless
Buyer, Parent and their respective Affiliates, officers, directors, employees,
representatives, agents and stockholders (collectively, "Buyer Indemnitees")
against the net amount of all claims, losses, settlements, fines, liabilities,
damages, deficiencies, costs and expenses, including, without limitation, losses
resulting from the defense, settlement and/or compromise of a claim and/or
demand and/or assessment, reasonable attorneys', accountants' and expert
witnesses' fees, interest, penalties, costs and expenses of investigation, and
the costs and expenses of enforcing the indemnification provided hereunder,
suffered, sustained, incurred or required to be paid by any of Buyer Indemnitees
(after deduction of the amount of any insurance proceeds recoverable (less
premiums paid for such period) and net of any tax benefit actually realized)
(hereafter individually a "Loss" and collectively "Losses") and due to, based
upon, arising out of or relating to: (i) any Excluded Liability; (ii) any breach
of any representation or warranty or any inaccuracy of any representation made
by ▇▇▇▇▇▇ in this Master Agreement or the Ancillary Agreements; (iii) any breach
of any covenant, agreement or obligation of ▇▇▇▇▇▇ contained in this Master
Agreement or the Ancillary Agreements; and (iv) the failure to have obtained any
authorizations, consents, orders, permits, approvals or notifications required
under Environmental Laws prior to the Closing; (v) any of the Deferred Closings
which Losses would not have been incurred if such Deferred Closing had occurred
on the Closing Date; and (vi) the acquisition of assets of each of ▇▇▇▇▇▇ ▇.▇.
(Belgium), ▇▇▇▇▇▇ Semiconductor GmbH (Germany) and ▇▇▇▇▇▇ Semiconductor Design &
Sales Pte. Ltd. (Singapore) which Losses would not have been incurred if, in
lieu of such asset sale, a stock sale was consummated. Notwithstanding the
foregoing, damages shall constitute Losses for the purpose of clauses (i)
through (iv) of this Section 13.2 only to the extent of the direct damages
incurred (excluding consequential damages, whether or not foreseeable).
(b) Except as set forth below, ▇▇▇▇▇▇ shall not be required to
indemnify Buyer Indemnitees with respect to any claim for indemnification
resulting from or arising out of matters
62
described in Section 13.2(a)(ii) unless and until the aggregate amount of all
such claims against Buyer Indemnitees exceeds three percent (3%) of the Purchase
Price (the "Threshold") and then Buyer Indemnitees will be entitled to recover
Losses in excess of the Threshold. Claims thereafter may be asserted regardless
of amount; provided, however, that the foregoing limitation shall not apply to a
claim for indemnification to the extent such claim is based upon a breach of a
representation contained in Sections 4.1, 4.2, 4.3, 4.9 or 4.22 hereof; and
provided, further, that ▇▇▇▇▇▇'▇ maximum liability to Buyer Indemnitees under
this Section 13.2 (not including indemnification with respect to Excluded
Liabilities, breaches of Section 7.2, breaches of representations contained in
Section 4.22, matters described in Section 13.2(a)(v) and (vi), and as set forth
in Sections 9.7 and 13.11) shall not exceed fifteen percent (15%) of the
Purchase Price in the aggregate.
(c) Notwithstanding anything to the contrary set forth in this Article
13, no limitation or condition on liability or indemnity shall apply to any
breach of a representation or warranty, if such breach of such representation or
warranty was untrue and the party making it had, at the time, actual knowledge
of such untruth.
13.3 Indemnity by Buyer and Parent.
(a) Subject to the provisions of Section 13.1 relating to the survival
of representations and warranties and the other limitations contained herein,
from and after the Closing, Buyer and Parent jointly and severally agree to
indemnify, defend and hold harmless ▇▇▇▇▇▇ and its respective Affiliates,
officers, directors, employees, representatives, agents and stockholders
(collectively, "Seller Indemnitees") against the net amount of all claims,
settlements, fines, losses, liabilities, damages, deficiencies, costs and
expenses, including, without limitation, losses resulting from the defense,
settlement and/or compromise of a claim and/or demand and/or assessment,
reasonable attorneys', accountants' and expert witnesses' fees, interest,
penalties, costs and expenses of investigation, and the costs and expenses of
enforcing the indemnification provided hereunder, suffered, sustained, incurred
or required to be paid by any of Seller Indemnitees (after deduction of the
amount of any insurance proceeds recoverable (less premiums paid for such
period) and net of any tax benefit actually realized) (hereafter individually a
"Loss" and collectively "Losses") and due to, based upon, arising out of or
relating to: (i) all Assumed Liabilities; (ii) any breach of any representation
or warranty or any inaccuracy of any representation, made by Buyer or Parent in
this Master Agreement or the Ancillary Agreements; and (iii) any breach of any
covenant, agreement or obligation of Buyer and Parent contained in this Master
Agreement or the Ancillary Agreements. Notwithstanding the foregoing, damages
shall constitute Losses for the purpose of this Section 13.3 only to the extent
of the direct damages incurred (excluding consequential damages, whether or not
foreseeable).
13.4 General Indemnification Procedures.
(a) In the event that any party incurs or suffers any Losses with
respect to which indemnification may be sought by such party pursuant to this
Article 13, the party seeking indemnification (the "Indemnitee") must assert the
claim by giving written notice (a "Claim Notice") to the party from whom
indemnification is sought (the "Indemnifying Party"). The Claim
63
Notice must state the nature, basis and amount (if known) of the claim in
reasonable detail based on the information available to the Indemnitee and, if
the Claim Notice is being given with respect to a third party claim, it must be
accompanied by a copy of any written notice of the third party claimant. If the
Claim Notice is being given by reason of any third party claim, it shall be
given in a timely manner but in no event more than 30 days after the filing or
other written assertion of any such claim against the Indemnitee, but the
failure of the Indemnitee to give the Claim Notice within such time period shall
not relieve the Indemnifying Party of any liability for indemnification under
this Article 13, except to the extent that the Indemnifying Party is prejudiced
thereby. If the amount of the claim is not known at the time the Claim Notice is
given, the Indemnitee shall also give notice of such amount to the Indemnifying
Party at such time as the amount of the claim is reasonably ascertainable. Each
Indemnifying Party to whom a Claim Notice is given shall respond to any
Indemnitee that has given a Claim Notice (a "Claim Response") within 30 days
(the "Response Period") after the date that the Claim Notice is received by
Indemnifying Party. Any Claim Response shall specify whether or not the
Indemnifying Party given the Claim Response disputes the claim described in the
Claim Notice in whole or in part. If any Indemnifying Party fails to give a
Claim Response within the Response Period, such Indemnifying Party shall be
deemed not to dispute the claim described in the related Claim Notice. If any
Indemnifying Party elects not to dispute a claim described in a Claim Notice,
whether by failing to give a timely Claim Response or otherwise, then such claim
shall be conclusively deemed to be an obligation of such Indemnifying Party.
Subject to the applicable limitations set forth in this Article 13, if any
Indemnifying Party shall be obligated to indemnify an Indemnitee hereunder, such
Indemnifying Party shall pay to such Indemnitee within 30 days after the last
day of the applicable Response Period (or at such later time as the amount is
ascertainable) the amount to which such Indemnitee shall be entitled. If there
shall be a dispute as to the amount or manner of indemnification under this
Agreement, the Indemnifying Party and the Indemnitee shall resolve such dispute
as provided in Section 6 of Exhibit B to this Master Agreement. If any
Indemnifying Party fails to pay all or any part of any indemnification
obligation on or before the later to occur of (x) 30 days after the last day of
the applicable Response Period, and (y) if the Claim Notice relates to Losses
that have not been liquidated as of the date of the Claim Notice, the date on
which all or any part of such Losses shall have become liquidated and
determined, then the Indemnifying Party shall also be obligated to pay to the
Indemnitee interest on the unpaid amount for each day during which the
obligation remains unpaid at an annual rate of ten percent.
(b) The Indemnitee shall provide to the Indemnifying Party on request
all information and documentation reasonably necessary to support and verify any
Losses that the Indemnitee believes give rise to the claim for indemnification
hereunder and shall give the Indemnifying Party reasonable access to all books,
records and personnel in the possession or under the control of the Indemnitee
that would have bearing on such claim.
(c) Except as hereinafter provided, in the case of third party claims
for which indemnification is sought, the Indemnifying Party shall have the
option: (x) to conduct any proceedings or negotiations in connection therewith,
(y) to take all other steps to settle or defend any such claim (provided that
the Indemnifying Party shall not settle any such claim without the consent of
the Indemnitee (which consent shall not be unreasonably withheld, it being
understood that it shall not be unreasonable for the Indemnitee to withhold its
consent from any settlement which (1) commits the Indemnitee to take, or to
forbear to take, any action, or (2) does not provide for a
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complete release of the Indemnitee by such third party)), and (z) to employ
counsel to contest any such claim or liability in the name of the Indemnitee or
otherwise. In any event, the Indemnitee shall be entitled to participate at its
own expense and by its own counsel (a "Voluntary Participation") in any
proceedings relating to any third party claim. The Indemnifying Party shall,
within 45 days of receipt of the Claim Notice, notify the Indemnitee of its
intention to assume the defense of the claim (a "Defense Notice"). Until the
Indemnitee has received the Defense Notice, the Indemnitee shall take reasonable
steps to defend (but may not settle) the claim. If the Indemnifying Party
declines to assume the defense of any such claim or fails to give a Defense
Notice within 45 days after receipt of the Claim Notice, the Indemnitee shall
defend against the claim but shall not settle such claim without the consent of
the Indemnifying Party (which consent shall not be unreasonably withheld). The
expenses of all proceedings, contests or lawsuits (other than those incurred in
a Voluntary Participation) with respect to claims as to which a party is
entitled to indemnification under this Article 13 shall represent indemnifiable
Losses under this Agreement. Regardless of which party shall assume the defense
of the claim, the parties shall cooperate fully with one another in connection
therewith. Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled (except with the consent of the Indemnitee) to take any of the actions
referred to in clauses (x), (y) or (z) of the first sentence of this
subparagraph unless: (a) the third party claim involves principally monetary
damages; (b) the Indemnifying Party shall have expressly agreed in writing that,
as between the Indemnifying Party and the Indemnitee, the Indemnifying Party
shall be solely obligated to satisfy and discharge such third party claim; and
(c) the Indemnifying Party has the financial capacity to take over the defense
of such claim.
13.5 Environmental Procedures.
(a) ▇▇▇▇▇▇ agrees to respond on Buyer's or the Transferred
Subsidiaries' behalf and defend Buyer Indemnitees with respect to Losses arising
from Environmental Liabilities, or, at ▇▇▇▇▇▇' option, reimburse Buyer's or the
Transferred Subsidiaries' for such Losses.
(b) With respect to any Environmental Liabilities for which ▇▇▇▇▇▇ is
responsible to conduct Remediation under this Master Agreement on or about any
property owned, operated or leased by the Transferred Subsidiaries after the
Closing, ▇▇▇▇▇▇ shall be responsible for such Remediation to meet the Minimum
Cleanup Standard. For purposes of this Master Agreement, the "Minimum Cleanup
Standard" shall mean the least stringent standard acceptable under all
Environmental Laws (as such laws are in effect upon the completion of the
Remediation) and all Governmental Authorities with jurisdiction or, if no such
standard has been adopted, promulgated or imposed by the applicable Governmental
Authority or by Environmental Laws (as such laws are in effect upon the
completion of the Remediation) as of the date such Remediation is being
conducted, the standard to which the parties, in good faith agree; provided,
however, that in no event shall the Minimum Cleanup Standard at or below a
standard for which (i) Buyer or the Transferred Subsidiaries would be required
to impose or implement controls or restrictions which would impair the use of
the affected property as used as of the Closing Date, (ii) for which additional
Remediation would be required in the future to achieve and maintain compliance
with Environmental Laws or to meet the requirements of Governmental Authorities,
as such Environmental Laws and requirements exist as of the date of the
completion of the Remediation; or (iii) which does not fully resolve any
liability of Buyer Indemnitees and the Transferred Subsidiaries with respect to
such matter; provided, further, that
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with respect to any Remediation at any property leased by the Transferred
Subsidiaries, the Minimum Cleanup Standard shall also meet the requirements of
the landlord/lessor of such property.
(c) Remediation conducted by ▇▇▇▇▇▇ shall be conducted in a manner
which minimizes interference to the Transferred Subsidiaries after the Closing
Date, and if and to the extent various Remediation alternatives are available,
▇▇▇▇▇▇ shall implement or pay for the implementation, as the case may be, of
such Remediation which imposes the least interruption, interference or
disruption (taking into account the cost effectiveness, regulatory and legal
constraints) unless (i) the Buyer Indemnitees and the Transferred Subsidiaries
consent to a different alternative, or (ii) ▇▇▇▇▇▇ indemnifies and reimburses
the Buyer and the Transferred Subsidiaries for all Losses arising from such
interruption, interference and disruption (including consequential damages
resulting therefrom).
(d) With respect to Remediation performed by ▇▇▇▇▇▇, ▇▇▇▇▇▇ shall: (i)
diligently and expeditiously perform or cause to be performed such Remediation
to completion; (ii) provide Buyer and the Transferred Subsidiaries reasonable
prior notice of ▇▇▇▇▇▇' access requirements and obtain Buyer's consent before
commencing or performing any Remediation (which consent shall not be
unreasonably withheld); (iii) keep Buyer and the Transferred Subsidiaries
reasonably informed of the progress of the on-site activities and provide Buyer
and the Transferred Subsidiaries with copies of any results of sampling and
analytical data (including any status reports of work in progress or reports
required to be submitted to any Governmental Authorities in connection with
conducting the Remediation); (iv) provide Buyer and the Transferred Subsidiaries
a reasonable opportunity to review and comment on any submittal to Governmental
Authorities and consider in good faith Buyer's and the Transferred Subsidiaries'
reasonable comments which must be expeditiously provided (and ▇▇▇▇▇▇
acknowledges that any comments, which relate to the interruption, interference,
or disruption with the operation of the Business, damage to the Property, the
safety of personnel, or compliance with Environmental Laws shall be deemed
reasonable); (v) provide Buyer and the Transferred Subsidiaries with the
opportunity to observe all of the activities undertaken by or on behalf of
▇▇▇▇▇▇ in implementing the Remediation; (vi) provide reasonable advance notice
to Buyer and the Transferred Subsidiaries of any meetings with any Governmental
Authorities concerning the Remediation and permit Buyer and the Transferred
Subsidiaries may attend such meetings; (vii) comply with all applicable
Environmental Laws and other laws and Buyer's and the Transferred Subsidiaries'
reasonable health and safety requirements; and (viii) promptly upon completion
of any on-site activities, restore any adversely affected portions of the
property to its predisturbed condition such that Buyer and the Transferred
Subsidiaries can continue the operation of the Business in the manner in which
such Business was conducted prior to the commencement of the on-site activities.
(e) ▇▇▇▇▇▇ shall indemnify, defend and hold harmless Buyer Indemnitees
and the Transferred Subsidiaries against any Losses asserted against or incurred
by the Buyer Indemnitees or the Transferred Subsidiaries arising out of or
relating to activities conducted by ▇▇▇▇▇▇ or its employees, agents, contractors
and their subcontractors in connection with the performance of the Remediation
or the fulfillment of ▇▇▇▇▇▇' obligations with respect to Pre-Closing
Environmental Claims, and the Buyer and the Transferred Subsidiaries shall
indemnify
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and hold harmless ▇▇▇▇▇▇ against any Losses to the extent arising out of or
relating to Buyer's or the Transferred Subsidiaries' interference with or
disruption of ▇▇▇▇▇▇' Remediation, or any Release caused by Buyer or any
Transferred Subsidiary after the Closing Date.
(f) With respect to any Remediation which commenced prior to the
Closing Date which is subject to any consent decree, administrative order or
other agreement with a Governmental Authority or other Person, Harris shall
remain the ordered and/or contracting party after the Closing. With respect to
the Palm Bay, Florida Facility, the parties agree that, without cost to Harris,
Buyer or Transferred Subsidiaries will continue to inspect and provide minor
maintenance at the same level as occurred prior to the Closing Date (provided
the cost to Buyer of such inspection and minor maintenance shall be de minimis)
and provide access for sampling events for Operable Unit 2 Remediation
activities in connection with the ▇▇▇▇▇▇ Corporation National Priorities List
("NPL") Site, and ▇▇▇▇▇▇ will continue to perform all other activities,
including all Remediation, sampling and analysis, and reporting those results to
any Governmental Authority (including, without limitation, the United States
Environmental Protection Agency). ▇▇▇▇▇▇ agrees, without cost to Buyer or
Transferred Subsidiaries, to continue to provide treated groundwater from its
Operable Unit 1 Remediation activities with the ▇▇▇▇▇▇ Corporation NPL Site, and
Buyer and Transferred Subsidiaries agree to accept such water for its production
process. ▇▇▇▇▇▇ covenants and agrees that such water will be of a quality such
that it will be able to be used in the same manner as such water was used prior
to the Closing Date. Buyer and Transferred Subsidiaries acknowledge that the
volume of such water may decrease as the Remediation activities at Operable Unit
1 proceed and both parties agree not to change this arrangement without
providing the other party at least six (6) months' prior notice and agreeing to
appropriate alternate arrangements for such water.
13.6 Costs Related to Direct Claims. Notwithstanding anything in this
Article 13 to the contrary, except as otherwise may be ordered by a court of
competent jurisdiction, Buyer Indemnitees and Seller Indemnitees shall bear
their own costs, including counsel fees and expenses, incurred in connection
with direct claims against Buyer, Parent and ▇▇▇▇▇▇, respectively, hereunder
that are not based upon claims asserted by third parties.
13.7 Exclusivity. The right of each party hereto to assert indemnification
claims and receive indemnification payments pursuant to this Article 13 shall be
the sole and exclusive right and remedy against the other party exercisable by
such party after the Closing with respect to any breach by the other party
hereto of any representation, warranty or covenant in this Master Agreement or
any Ancillary Agreement or failure to pay or perform any Assumed Liability or
Excluded Liability, as applicable, provided, however, that neither this Section
13.7 nor Section 6 of Exhibit B to this Master Agreement shall prohibit the
maintenance of actions to compel specific performance of the parties' respective
covenants in this Master Agreement.
13.8 No Set-Off. Neither Buyer nor Seller shall have any right to set-off
any indemnification obligations that either may have under this Article 13
against any other obligations or amounts due to Buyer or Seller, as applicable,
including, without limitation, under any other provisions of this Master
Agreement or under any other Transaction Document.
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13.9 Retention of Records. From and after the date of this Master
Agreement, Buyer and ▇▇▇▇▇▇ shall preserve all books, records and other
documents, materials and information ("Representation Records") relevant to the
representations, warranties and covenants set forth in this Master Agreement for
a period of three years following the date of this Master Agreement or for such
longer period as the rights of the parties hereunder may exist. After Buyer and
▇▇▇▇▇▇ are no longer obligated to retain the Representation Records pursuant to
this Section 13.9, Buyer or ▇▇▇▇▇▇, as applicable, shall give the other party
not less than thirty (30) days prior written notice before destroying any
Representation Records and, if the other party so requests, shall deliver such
Representation Records to the other party instead of destroying such
Representation Records.
13.10 Notice as to Representations. Without limiting any of the other
obligations of the respective parties hereunder, if at any time after the date
of this Master Agreement Buyer or Parent shall have any reason to believe that
any representation or warranty made by ▇▇▇▇▇▇ hereunder may have been untrue,
Buyer or Parent, as the case may be, shall promptly provide ▇▇▇▇▇▇ written
notice to that effect, indicating the basis for Buyer's or Parent's belief that
such representation or warranty may have been untrue. For purposes of this
Article 13, ▇▇▇▇▇▇ shall not be deemed to have breached any representation or
warranty if Buyer or Parent, prior to the Closing Date, had actual knowledge of
the breach, or facts and circumstances constituting or resulting in a breach, of
such representation or warranty, and consummated, without written notice to
▇▇▇▇▇▇ of such breach and a reservation of its right, the purchase of the
Transferred Assets notwithstanding such knowledge.
13.11 Separate Indemnification for Taxes. Notwithstanding anything
contained in this Master Agreement to the contrary, indemnification for Tax
matters set forth in Section 9.7 shall be governed solely by the terms of
Section 9.7.2. To the extent any terms of this Article 13 and Section 9.7.2 are
deemed to be inconsistent with respect to any Tax matters, the terms of Section
9.7 shall govern such matter.
13.12 Indemnification Payments as Purchase Price Adjustment. Any payments
made by Buyer or Parent under this Article 13 shall be considered an increase to
the Purchase Price. Any payments made by ▇▇▇▇▇▇ under this Article 13 shall be
considered a reduction of the Purchase Price.
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ARTICLE 14
MISCELLANEOUS
14.1 Material Adverse Effect. Any adverse change, event or effect that is
proximately caused by conditions affecting the United States or international
economy generally shall not be taken into account in determining whether there
has been or would be a Material Adverse Effect on the Business or a Material
Adverse Effect on Buyer (unless such conditions adversely affect the Business
Entities or Buyer, as the case may be, in a materially disproportionate manner).
Any adverse change, event or effect that is proximately caused by any industry
in which Buyer or the Business Entities competes shall not be taken into account
in determining whether there has been or would be a Material Adverse Effect on
Buyer or Material Adverse Effect on the Business (unless such conditions
adversely affect the Business Entities or Buyer, as the case may be, in a
materially disproportionate manner). Any adverse change, event or effect that is
proximately caused by the announcement or pendency of the sale of the Business
and the Transferred Assets shall not be taken into account in determining
whether there has been or would be a Material Adverse Effect on Buyer or a
Material Adverse Effect on the Business. Any adverse change, event or effect
that is proximately caused by any breach by Buyer or the Business Entities of
any covenant or obligation set forth in this Master Agreement shall not be taken
into account in determining whether there has been or would be a Material
Adverse Effect on the Business or Material Adverse Effect on Buyer,
respectively.
14.2 Disclaimer of Projections, Etc. The Business Entities make no
representation or warranty to Buyer except as specifically made in this Master
Agreement and the Ancillary Agreements. In particular, the Business Entities
make no representation or warranty to Buyer with respect to the contents of the
Business Entity management presentations to Buyer or the data room made
available to Buyer, including the certainty or accuracy of any financial
projection or forecast delivered by or on behalf of any Business Entity to
Buyer. Buyer acknowledges that (a) there are uncertainties inherent in
attempting to make such projections and forecasts, (b) it is familiar with such
uncertainties, (c) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections and forecasts so
furnished to it, and (d) it shall have no claim against Sellers with respect
thereto.
14.3 Expenses. If the purchase of the Transferred Assets is consummated or
if this Master Agreement is terminated, ▇▇▇▇▇▇ and Buyer shall pay their own
respective expenses and costs incidental to the preparation of this Master
Agreement, the performance and compliance with all agreements contained in this
Master Agreement to be performed or complied with by them and the consummation
of the transactions contemplated hereby, and none of such costs and expenses
shall be or become liabilities of the Transferred Subsidiaries or be considered
Assumed Liabilities.
14.4 Compliance with Bulk Sales Laws. The parties hereby expressly waive
compliance with any applicable bulk sales laws.
14.5 Inconsistencies. If there shall be any inconsistency between this
Master Agreement and any of the Transaction Documents other than the IP Transfer
Agreements, the
69
provisions of this Master Agreement shall prevail. Nothing in any of the
Ancillary Documents (other than the IP Transfer Agreements) which involve any
agreement to convey, or the conveyance of, any of the Transferred Assets or any
agreement to assume, or the assumption of, any of the Assumed Liabilities, shall
be deemed to supercede, enlarge or modify any of the obligations, agreements,
covenants, or warranties of the Sellers contained in the Master Agreement.
ARTICLE 15
AGREEMENT CONVENTIONS
The Agreement Conventions set forth in Exhibit B to this Master Agreement
are incorporated herein by reference.
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IN WITNESS WHEREOF, the parties hereto have duly caused this Master
Agreement to be executed as of the date first above written.
INTERSIL HOLDING CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: CEO Intersil Holding Corp.
INTERSIL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: CEO
▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
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