Acquisition Agreement - Micron Technology Inc. and Texas Instruments Inc.
EXECUTION COPY
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ACQUISITION AGREEMENT
DATED JUNE 18, 1998
BETWEEN
MICRON TECHNOLOGY, INC.
AND
TEXAS INSTRUMENTS INCORPORATED
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS.................................................................. 1
1.1 "Access Rights".................................................................. 1
1.2 "Acquired Assets"................................................................ 1
1.3 "Acquired Assets Tax Returns".................................................... 1
1.4 "Acquired Fab Sites"............................................................. 1
1.5 "Acquired Facilities"............................................................ 1
1.6 "Acquired Intellectual Property"................................................. 2
1.7 "Adjusted Balance Sheet"......................................................... 2
1.8 "Affiliate"...................................................................... 2
1.9 "Agents"......................................................................... 2
1.10 "Assumed Liabilities"............................................................ 2
1.11 "Business"....................................................................... 2
1.12 "Business Day"................................................................... 2
1.13 "Buyer".......................................................................... 2
1.14 "Buyer COBRA Election"........................................................... 2
1.15 "Buyer Common Stock"............................................................. 2
1.16 "Buyer Disclosure Letter"........................................................ 2
1.17 "Buyer Indemnified Claims"....................................................... 2
1.18 "Buyer Material Adverse Effect".................................................. 2
1.19 "Buyer Maximum Amount"........................................................... 3
1.20 "Buyer Operating Group".......................................................... 3
1.21 "Buyer SEC Documents"............................................................ 3
1.22 "Buyer Transferred Business Employees"........................................... 3
1.23 "Buyer's Taxes".................................................................. 3
1.24 "Cash Payment"................................................................... 3
1.25 "Claim".......................................................................... 3
1.26 "Closing"........................................................................ 3
1.27 "Closing Balance Sheet".......................................................... 3
1.28 "Closing Date"................................................................... 3
1.29 "Closing Statement".............................................................. 3
1.30 "Closing Time"................................................................... 3
1.31 "COBRA".......................................................................... 3
1.32 "Code"........................................................................... 3
1.33 "Contamination".................................................................. 3
1.34 "Contract"....................................................................... 4
1.35 "Convertible Notes".............................................................. 4
1.36 "Copyrights"..................................................................... 4
1.37 "Cross-License Agreement"........................................................ 4
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1.38 "Debt Valuation"................................................................. 4
1.39 "Designated Employees"........................................................... 4
1.40 "Destroyed Asset"................................................................ 4
1.41 "Disposal Facility".............................................................. 4
1.42 "Domestic Employees"............................................................. 4
1.43 "DRAM"........................................................................... 4
1.44 "EDB"............................................................................ 4
1.45 "Effective Time"................................................................. 4
1.46 "Employee Benefit Plan".......................................................... 4
1.47 "Employment Act"................................................................. 5
1.48 "Environmental Reports".......................................................... 5
1.49 "Environmental Requirements"..................................................... 5
1.50 "EPROM".......................................................................... 5
1.51 "ERISA".......................................................................... 5
1.52 "ERISA Affiliate"................................................................ 5
1.53 "Excess"......................................................................... 5
1.54 "Exchange Act"................................................................... 5
1.55 "Excluded Assets"................................................................ 5
1.56 "Excluded Contracts"............................................................. 5
1.57 "Excluded Employees"............................................................. 6
1.58 "Excluded Liabilities"........................................................... 6
1.59 "Facility Indemnitees"........................................................... 6
1.60 "Financial Statements"........................................................... 6
1.61 "FMLA"........................................................................... 6
1.62 "Foreign Benefit Plans".......................................................... 6
1.63 "Foreign Employees".............................................................. 6
1.64 "Former Facilities".............................................................. 6
1.65 "GAAP"........................................................................... 6
1.66 "Gore Software".................................................................. 6
1.67 "Governmental Agency"............................................................ 6
1.68 "Governmental Approval".......................................................... 6
1.69 "Hazardous Material"............................................................. 6
1.70 "Hazardous Material Activities".................................................. 7
1.71 "HIPAA".......................................................................... 7
1.72 "HSR Act"........................................................................ 7
1.73 "Indemnified Buyer Group"........................................................ 7
1.74 "Indemnified Claims"............................................................. 7
1.75 "Indemnified Seller Group"....................................................... 7
1.76 "Indenture"...................................................................... 7
1.77 "Independent Accounting Firm".................................................... 7
1.78 "Intellectual Property".......................................................... 7
1.79 "Issue Price".................................................................... 8
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1.80 "Italian and Singapore Transferred Business Employees"........................... 8
1.81 "Italian Newco".................................................................. 8
1.82 "Italian Operating Company"...................................................... 8
1.83 "Joint Venture Assets"........................................................... 8
1.84 "Joint Venture Facilities"....................................................... 8
1.85 "Joint Ventures"................................................................. 8
1.86 "JV Agreements".................................................................. 8
1.87 "JV Amendments".................................................................. 8
1.88 "JV Audited Financial Statements"................................................ 8
1.89 "JV Financial Statements"........................................................ 8
1.90 "JV Interests"................................................................... 8
1.91 "JV Interim Financial Statements"................................................ 8
1.92 "JV Material Adverse Effect"..................................................... 8
1.93 "JV Permits and Approvals"....................................................... 9
1.94 "JV Transfer Agreements"......................................................... 9
1.95 "KTI"............................................................................ 9
1.96 "KTI Agreements"................................................................. 9
1.97 "KTI Amendments"................................................................. 9
1.98 "KTI Shareholders' Agreement".................................................... 9
1.99 "Law"............................................................................ 9
1.100 "Leased Facilities".............................................................. 9
1.101 "Liability"...................................................................... 9
1.102 "Licensed IP".................................................................... 9
1.103 "Liens".......................................................................... 9
1.104 "Loss" or "Losses"............................................................... 10
1.105 "March Balance Sheet"............................................................ 10
1.106 "Maskworks"...................................................................... 10
1.107 "Material Adverse Effect"........................................................ 10
1.108 "Maximum Amount"................................................................. 10
1.109 "Memory Products"................................................................ 10
1.110 "Newco Shares"................................................................... 10
1.111 "Non-Assignable Contract"........................................................ 10
1.112 "Notes".......................................................................... 10
1.113 "Notice of Objection"............................................................ 10
1.114 "Operating Group"................................................................ 11
1.115 "Owned Facilities"............................................................... 11
1.116 "Patents"........................................................................ 11
1.117 "Permits and/or Approvals"....................................................... 11
1.118 "Permitted Liens"................................................................ 11
1.119 "Person"......................................................................... 11
1.120 "Pre-Closing Period"............................................................. 12
1.121 "Pre-Closing Seller Operations".................................................. 12
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1.122 "Preliminary Balance Sheet"...................................................... 12
1.123 "Price Allocation"............................................................... 12
1.124 "Proceeding"..................................................................... 12
1.125 "Registered Intellectual Property"............................................... 12
1.126 "Related Agreements"............................................................. 12
1.127 "Remedial Activities"............................................................ 12
1.128 "Reorganization"................................................................. 12
1.129 "Reorganization Agreements"...................................................... 12
1.130 "Required Utilities"............................................................. 12
1.131 "Requisite Regulatory Approvals"................................................. 12
1.132 "Retained Environmental Liabilities"............................................. 13
1.133 "Right and/or Claim"............................................................. 14
1.134 "SEC"............................................................................ 14
1.135 "Securities"..................................................................... 14
1.136 "Securities Act"................................................................. 14
1.137 "Securities Rights and Restrictions Agreement"................................... 14
1.138 "Seller"......................................................................... 14
1.139 "Seller Disclosure Letter"....................................................... 14
1.140 "Seller Group"................................................................... 15
1.141 "Seller Indemnified Claims"...................................................... 15
1.142 "Seller Note Purchasing Subsidiary".............................................. 15
1.143 "Seller's Taxes"................................................................. 15
1.144 "Seller's Year 2000 Plan"........................................................ 15
1.145 "Shortfall"...................................................................... 15
1.146 "Shutdown Costs"................................................................. 15
1.147 "Singapore Newco"................................................................ 15
1.148 "Singapore Operating Company".................................................... 15
1.149 "Straddle Period"................................................................ 15
1.150 "Subordinated Notes"............................................................. 15
1.151 "Subsidiary"..................................................................... 15
1.152 "Successor"...................................................................... 15
1.153 "Supplemental Indenture"......................................................... 15
1.154 "Sustaining Costs"............................................................... 16
1.155 "Target Amount".................................................................. 16
1.156 "Target Closing Date"............................................................ 16
1.157 "Tax" or "Taxes"................................................................. 16
1.158 "Tax Parameters"................................................................. 16
1.159 "Tax Proceedings"................................................................ 16
1.160 "Tax Return"..................................................................... 16
1.161 "TECH"........................................................................... 16
1.162 "TECH Agreements"................................................................ 16
1.163 "TECH Amendments"................................................................ 16
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1.164 "TECH Shareholders' Agreement"................................................... 16
1.165 "Territory"...................................................................... 16
1.166 "Texas Transferred Business Employees"........................................... 17
1.167 "Threshold Amount"............................................................... 17
1.168 "Trade Secrets".................................................................. 17
1.169 "Trademarks"..................................................................... 17
1.170 "Transfer Tax or Taxes".......................................................... 17
1.171 "Transferred Acquired Assets".................................................... 17
1.172 "Transferred Assumed Liabilities"................................................ 17
1.173 "Transferred Business Employees"................................................. 17
1.174 "Transferred Contract"........................................................... 17
1.175 "Transferred Contract Schedule".................................................. 17
1.176 "Transition Agreement"........................................................... 17
1.177 "Transition Plan Year"........................................................... 17
1.178 "Transition Services"............................................................ 17
1.179 "Transition Services Agreement".................................................. 17
1.180 "Twinstar"....................................................................... 17
1.181 "Twinstar Facility".............................................................. 18
1.182 "Warn Act"....................................................................... 18
1.183 "Working Capital"................................................................ 18
1.184 "Working Capital Reduction"...................................................... 18
1.185 "Working Capital Requirement".................................................... 18
ARTICLE II THE ACQUISITION............................................................. 18
2.1 Transfer of Assets............................................................... 18
2.2 Assumption of Liabilities........................................................ 18
ARTICLE III THE CLOSING................................................................ 18
3.1 Time and Place of Closing........................................................ 18
3.2 Closing Date Deliveries of Seller................................................ 19
3.3 Closing Date Deliveries of Buyer................................................. 20
3.4 Purchase and Sale of Notes....................................................... 20
3.5 Subsequent Documentation......................................................... 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER.................................... 22
4.1 Representations and Warranties Relating to the Seller Group...................... 22
4.2 Representations and Warranties Relating to the Joint Ventures.................... 40
4.3 Knowledge........................................................................ 47
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER...................................... 48
5.1 Organization and Qualification................................................... 48
5.2 Corporate Authority.............................................................. 48
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5.3 No Violations.................................................................... 49
5.4 Capitalization................................................................... 49
5.5 Valid Issuance of Buyer Common Stock............................................. 49
5.6 Valid Authorization of Notes..................................................... 49
5.7 SEC Filings; Financial Statements................................................ 50
5.8 Litigation....................................................................... 50
5.9 Knowledge........................................................................ 50
ARTICLE VI ADDITIONAL AGREEMENTS OF THE PARTIES........................................ 50
6.1 The Reorganization............................................................... 50
6.2 Actions of the Seller Group and Conduct of Business Prior to Closing
Date............................................................................. 52
6.3 Regulatory Matters............................................................... 53
6.4 Working Capital Requirement...................................................... 54
6.5 Investment Incentives............................................................ 56
6.6 Italian Operations............................................................... 56
6.7 Transition Services.............................................................. 56
6.8 Working Capital.................................................................. 57
6.9 Financial Statements............................................................. 57
6.10 Seller Disclosure Letter......................................................... 57
6.11 Buyer Disclosure Letter.......................................................... 57
6.12 JV Amendments.................................................................... 58
6.13 Acquired Facilities.............................................................. 58
6.14 Certain Rights................................................................... 58
6.15 Licenses of Intellectual Property................................................ 59
6.16 Certain Software................................................................. 59
6.17 Access to Information............................................................ 60
6.18 Tax Parameters; Price Allocation................................................. 61
6.19 Notices of Certain Events........................................................ 61
6.20 Bulk Sales Waiver................................................................ 61
6.21 Expenses......................................................................... 62
6.22 Transfer Taxes; Transfer and Recording Fees...................................... 62
6.23 Shutdown Costs................................................................... 62
6.24 Securities Act Compliance; Restrictions on Sale.................................. 63
6.25 Covenant Not to Compete.......................................................... 63
6.26 Collection of Accounts........................................................... 64
6.27 Public Disclosure................................................................ 64
6.28 Assistance with Audit............................................................ 64
6.29 Use of Proceeds.................................................................. 65
6.30 Maintenance of Trade Secrets..................................................... 65
6.31 Assignment of Contracts.......................................................... 65
ARTICLE VII TAX MATTERS................................................................ 67
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7.1 Tax Representations.............................................................. 67
7.2 Indemnity........................................................................ 69
7.3 Tax Returns...................................................................... 70
7.4 Refunds and Credits.............................................................. 70
7.5 Termination of Tax Sharing Agreements............................................ 71
7.6 Tax Elections.................................................................... 71
7.7 Conduct of Audits and Other Procedural Matters................................... 71
7.8 Assistance and Cooperation....................................................... 72
7.9 Survival......................................................................... 73
ARTICLE VIII EMPLOYEE MATTERS.......................................................... 73
8.1 Transfer of Employment........................................................... 73
8.2 Coverage Under Employee Benefit Plans............................................ 75
8.3 General Matters.................................................................. 76
8.4 Employee Tax Withholding and Reporting........................................... 77
8.5 Other Employment Matters......................................................... 77
ARTICLE IX CONDITIONS PRECEDENT TO CLOSING............................................. 78
9.1 Conditions Precedent to Obligations of Buyer and Seller.......................... 78
9.2 Conditions Precedent to Obligations of Buyer..................................... 79
9.3 Conditions Precedent to Obligations of Seller.................................... 80
ARTICLE X SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION................................. 81
10.1 Survival of Representations; Effect of Breach.................................... 81
10.2 Seller's Agreement to Indemnify.................................................. 81
10.3 Tax Indemnity.................................................................... 82
10.4 Buyer's Agreement to Indemnify................................................... 82
10.5 Notice of Claims; Contest of Claims.............................................. 83
10.6 Treatment of Indemnities......................................................... 83
10.7 Risk of Loss..................................................................... 84
10.8 Indemnity Payments............................................................... 84
10.9 Seller's Duty to Complete Remedial Activities.................................... 84
10.10 Seller's Duty With Respect to Intellectual Property.............................. 86
10.11 Waivers and Survival............................................................. 86
ARTICLE XI TERMINATION................................................................. 87
11.1 Termination...................................................................... 87
11.2 Effect of Termination............................................................ 88
11.3 Further Provisions............................................................... 88
ARTICLE XII MISCELLANEOUS.............................................................. 88
12.1 Further Assurances............................................................... 88
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12.2 Specific Performance............................................................. 88
12.3 No Waiver........................................................................ 88
12.4 Severability..................................................................... 89
12.5 No Third Party Beneficiary....................................................... 89
12.6 Entire Agreement; Amendments..................................................... 89
12.7 Assignment....................................................................... 89
12.8 Governing Law.................................................................... 89
12.9 Notices.......................................................................... 89
12.10 Fees and Expenses................................................................ 90
12.11 Table of Contents; Headings; Schedules........................................... 91
12.12 Counterparts..................................................................... 91
12.13 Publicity........................................................................ 91
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TABLE OF CONTENTS
(continued)
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EXHIBITS:
Description of Acquired Assets and Excluded Assets........................................... A
Description of Assumed Liabilities and Excluded Liabilities.................................. B
Cross-License Agreement...................................................................... C
March Balance Sheet.......................................................................... D
Form of Securities Rights and Restrictions Agreement......................................... E
Form of Subordinated Notes................................................................... F
Form of Supplemental Indenture............................................................... G
Price Allocation/Tax Parameters.............................................................. H
Form of Transition Services Agreement........................................................ I
List of Certain Excluded Liabilities......................................................... J
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ACQUISITION AGREEMENT
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This ACQUISITION AGREEMENT, dated June 18, 1998 (this "Agreement"), is
between Micron Technology, Inc., a Delaware corporation ("Buyer"), and Texas
Instruments Incorporated, a Delaware corporation ("Seller"). All capitalized
terms used herein have the meanings ascribed to such terms in Article I hereof
or as otherwise defined herein.
RECITALS
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A. Seller engages, through its Subsidiaries and through the Joint
Ventures, in research and development, manufacture, assembly, sales and
distribution of devices capable of storing data or information, including DRAMs
and EPROMs, and certain other activities related thereto;
B. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, all of the assets of said Business upon the terms and subject to the
conditions set forth in this Agreement; and
C. It is intended that, contemporaneously with the closing of the
transactions contemplated hereby, (i) each of the parties to the Joint Ventures
shall enter into binding written agreements providing for Buyer to replace
Seller in its relationships with each of the Joint Ventures, (ii) a wholly owned
subsidiary of Seller shall purchase certain Subordinated Notes and certain
Convertible Notes and (iii) Buyer and Seller shall enter into the Cross-License
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
I.1 "Access Rights" has the meaning set forth in Section 6.17 hereof.
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I.2 "Acquired Assets" has the meaning set forth in Exhibit A hereto.
---------------
I.3 "Acquired Assets Tax Returns" has the meaning set forth in Section 7.3
---------------------------
hereof.
I.4 "Acquired Fab Sites" has the meaning set forth in Exhibit A hereto.
------------------
I.5 "Acquired Facilities" means the Owned Facilities and the Leased
-------------------
Facilities as specified in Section 1.5 of the Seller Disclosure Letter.
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I.6 "Acquired Intellectual Property" means the Intellectual Property,
------------------------------
other than Patents issued or Patent applications filed before the Closing Date,
owned by any member of the Seller Group and primarily related to or primarily
used in the Business. Acquired Intellectual Property shall include Intellectual
Property, other than Patents issued or Patent applications filed prior to the
Closing Date, in any invention or work created, conceived or authored by an
employee of the Business.
I.7 "Adjusted Balance Sheet" has the meaning set forth in Section 6.4
----------------------
hereof.
I.8 "Affiliate" means, with respect to a specified Person, a Person that
---------
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such Person, provided that in no
event shall any member of the Seller Group be deemed to be an Affiliate of
Buyer.
I.9 "Agents" means, with respect to the referenced principal, any past or
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present officer, director, employee, representative, shareholder, or contractor
of the referenced principal, or any other Person for whom such principal is
legally responsible.
I.10 "Assumed Liabilities" has the meaning set forth in Exhibit B hereto.
-------------------
I.11 "Business" means the business of the Seller Group relating to the
--------
manufacture, assembly, sales and distribution of MOS memory devices capable of
storing data or information (including DRAM, Flash and EPROM devices) including
all products and aspects of such business under current research and
development.
I.12 "Business Day" means a day other than a Saturday, Sunday or other day
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on which the New York Stock Exchange does not conduct regular trading.
I.13 "Buyer" has the meaning set forth in the Preamble hereof.
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I.14 "Buyer COBRA Election" has the meaning set forth in Section 8.2
--------------------
hereof.
I.15 "Buyer Common Stock" means the common stock, par value $0.10 per
------------------
share, of Buyer.
I.16 "Buyer Disclosure Letter" means Buyer's disclosure schedule to be
-----------------------
delivered to Seller pursuant to Section 6.11 of this Agreement.
I.17 "Buyer Indemnified Claims" has the meaning set forth in Section 10.2
------------------------
hereof.
I.18 "Buyer Material Adverse Effect" means a material adverse effect on
-----------------------------
the business, operations, results of operations, financial condition or assets
(including intangible assets) of Buyer's business, taken as a whole.
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I.19 "Buyer Maximum Amount" has the meaning set forth in Section 10.4
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hereof.
I.20 "Buyer Operating Group" means Buyer, Singapore Newco (after giving
---------------------
effect to the acquisition of all of the outstanding capital stock thereof by
Buyer or a Subsidiary of Buyer), Italian Newco (after giving effect to the
acquisition of all of the outstanding capital stock thereof by Buyer or a
Subsidiary of Buyer) and any Subsidiary designated by Buyer to purchase assets
in accordance with the terms of this Agreement.
I.21 "Buyer SEC Documents" has the meaning set forth in Section 5.7
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hereof.
I.22 "Buyer Transferred Business Employees" has the meaning set forth in
------------------------------------
Section 8.2 hereof.
I.23 "Buyer's Taxes" has the meaning set forth in Section 7.2 hereof.
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I.24 "Cash Payment" has the meaning set forth in Section 3.4 hereof.
------------
I.25 "Claim" means any Proceeding or any other demand, citation, summons,
-----
complaint, order or investigation by any Governmental Agency or other Person.
I.26 "Closing" means the consummation of the transactions contemplated
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hereby.
I.27 "Closing Balance Sheet" has the meaning set forth in Section 6.4
---------------------
hereof.
I.28 "Closing Date" means the date on which the Closing occurs.
------------
I.29 "Closing Statement" has the meaning set forth in Section 6.13 hereof.
-----------------
I.30 "Closing Time" has the meaning set forth in Section 3.1 hereof.
------------
I.31 "COBRA" means Title X of the Consolidated Omnibus Reconciliation Act
-----
of 1985, as amended.
I.32 "Code" means the Internal Revenue Code of 1986, as amended, and the
----
rules and regulations promulgated thereunder, as the same may be in effect from
time to time.
I.33 "Contamination" means any Hazardous Material which is present in the
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soil, groundwater, surface water, air, or building materials of a property in a
concentration that (i) exceeds the concentrations allowed by applicable
Environmental Requirements, and/or (ii) results in any requirement for Remedial
Activities or which is stored as of the Closing Date in any Acquired Facility in
violation of any Environmental Requirement applicable thereto as of the Closing
Date.
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I.34 "Contract" means any agreement, joint venture agreement, partnership
--------
agreement, assignment, lease, sublease, license, sublicense, settlement
agreement, consent decree, stipulation, promissory note, evidence of
indebtedness, loan agreement, indenture, security agreement, loan document,
insurance policy, or other contract or commitment (whether written or oral),
including any amendments, supplements or other modifications thereto.
I.35 "Convertible Notes" means the 6-1/2% Convertible Subordinated Notes
-----------------
due 2005 of Buyer issued or to be issued pursuant to the Indenture, as
supplemented by the Supplemental Indenture, such notes to be limited to an
aggregate principal amount of $740,000,000.
I.36 "Copyrights" has the meaning set forth in Section 1.78 hereof.
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I.37 "Cross-License Agreement" means the patent cross-license agreement
-----------------------
between Seller and Buyer, in the form of Exhibit C hereto.
I.38 "Debt Valuation" has the meaning set forth in Section 3.4 hereof.
--------------
I.39 "Designated Employees" has the meaning set forth in Section 8.1
--------------------
hereof.
I.40 "Destroyed Asset" has the meaning set forth in Section 6.14 hereof.
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I.41 "Disposal Facility" means any transporter, hauler, recycler,
-----------------
incinerator, or any storage, handling, or disposal operator or facility to which
Hazardous Material waste (which is generated in the course of the Pre-Closing
Seller Operations, generated prior to the Closing Date at any Acquired Facility
or Joint Venture Facility, or generated at any time by the Seller Group, or
Joint Venture, or their respective Agents or Affiliates) has been or is directly
or indirectly delivered, transported, stored, disposed of, or otherwise
transferred.
I.42 "Domestic Employees" means all employees of members of the Seller
------------------
Group or any of their Affiliates who are engaged primarily in the Business and
who are based in the United States of America.
I.43 "DRAM" means a dynamic random access memory device for the storage of
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digital information.
I.44 "EDB" means the Singapore Economic Development Board, a statutory
---
body established under the Economic Development Board Act of the Republic of
Singapore.
I.45 "Effective Time" has the meaning set forth in Exhibit B hereto.
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I.46 "Employee Benefit Plan" means any employee benefit plan as defined in
---------------------
Section 3(3) of ERISA, and any other plan (or practices or procedures having the
effect of a plan), arrangement, contract (other than a collective bargaining
agreement), program or policy benefiting employees,
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including, without limitation, any such plan, arrangement, contract, program or
policy with respect to deferred compensation, retention, fringe benefit, stock
appreciation right, "phantom" stock, bonus or other incentive compensation,
insurance, profit sharing, disability, thrift, stock purchase, day care,
healthcare, medical, dental, vision, legal services, qualified, nonqualified and
incentive stock option plan, supplemental or excess benefit plan, employee
discount, or severance.
I.47 "Employment Act" has the meaning set forth in Section 8.1 hereof.
--------------
I.48 "Environmental Reports" means those reports provided to Buyer
---------------------
pursuant to subsection 4.1(o) hereof.
I.49 "Environmental Requirements" means any and all applicable Permits
--------------------------
and/or Approvals, statutes, rules, ordinances, regulations, common laws, orders,
injunctions, decrees, judgments, stipulations, orders, treaties, protocols or
rulings of any Governmental Agency, and/or, to the extent legally binding upon
the Acquired Assets, the Buyer Operating Group, the Business, and/or the
Acquired Facilities, any and all consent decrees, settlement agreements,
Contracts, covenants running with land, and equitable servitudes which regulate
or prohibit any Hazardous Material or Hazardous Material Activity or are
otherwise intended to protect human health, reproduction, worker safety, the
environment, or natural resources.
I.50 "EPROM" means an erasable, programmable, read-only memory device that
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allows stored information to be erased.
I.51 "ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended (including, without limitation, any successor code), and the rules and
regulations promulgated thereunder, as the same may be in effect from time to
time.
I.52 "ERISA Affiliate" of any entity means any other entity which,
---------------
together with such entity, would be treated as a single employer under Section
414 of the Code.
I.53 "Excess" has the meaning set forth in Section 6.4 hereof.
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I.54 "Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
(including, without limitation, any successor act), and the rules and
regulations promulgated thereunder, as the same may be in effect from time to
time.
I.55 "Excluded Assets" has the meaning set forth in Exhibit A hereto.
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I.56 "Excluded Contracts" means the Contracts of a type described under
------------------
clauses (S) through (V) of Section 4.1(f)(i), unless otherwise agreed by Buyer.
In addition, "Excluded Contracts" shall mean all Contracts of any member of the
Seller Group primarily related or primarily used in the Business as conducted in
India, Japan or any of the sites set forth in clause 12 of the definition of
Excluded Assets set forth in Exhibit A hereto.
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I.57 "Excluded Employees" means Domestic Employees and Foreign Employees
------------------
located at, or whose employment primarily relates to, any of the locations or
operations identified under clause 12(d) of the definition of Excluded Assets on
Exhibit A hereto and certain administrative and marketing personnel located in
Singapore as agreed by Buyer and Seller.
I.58 "Excluded Liabilities" has the meaning set forth in Exhibit B hereto.
--------------------
I.59 "Facility Indemnitees" has the meaning set forth in Section 10.9
--------------------
hereof.
I.60 "Financial Statements" has the meaning set forth in Section 4.1(i)
--------------------
hereof.
I.61 "FMLA" means the Family and Medical Leave Act of 1993, as amended
----
(including, without limitation, any successor act), and the rules and
regulations promulgated thereunder, as the same may be in effect from time to
time.
I.62 "Foreign Benefit Plans" means all Employee Benefit Plans which cover
---------------------
Foreign Employees.
I.63 "Foreign Employees" means all employees of members of the Seller
-----------------
Group or any of their Affiliates who are engaged primarily in the Business and
who reside or are domiciled in a country other than the United States of
America; provided, however, that "Foreign Employees" shall not include any of
-------- -------
Seller's employees in India or Japan.
I.64 "Former Facilities" means any real property (other than the Acquired
-----------------
Facilities) that is or has been owned, leased, or otherwise used on or before
the Closing Date for the conduct of the Pre-Closing Seller Operations or which
was owned or leased on or before the Closing Date by any member of the Seller
Group or the Joint Ventures.
I.65 "GAAP" means U.S. generally accepted accounting principles.
----
I.66 "Gore Software" has the meaning set forth in Section 6.16 hereof.
-------------
I.67 "Governmental Agency" means any court, administrative agency,
-------------------
commission, law making body or other governmental authority or instrumentality
of the government of the United States, or any state, municipality, county or
town thereof, or of any foreign jurisdiction, or any agency, bureau, ministry,
law making body, commission or instrumentality thereof, including the employees
or agents thereof.
I.68 "Governmental Approval" means an approval, order or authorization of,
---------------------
or filing or registration with, or consent of or notification to any
Governmental Agency.
I.69 "Hazardous Material" means any material, substance or waste to the
------------------
extent designated by any applicable Governmental Agency to be radioactive,
toxic, hazardous or otherwise
-6-
<PAGE>
a danger to health, reproduction or the environment or that is regulated or
prohibited under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Occupational Safety and Health Act, the Resource
Conservation and Recovery Act of 1976, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Water Pollution Control Act, Nuclear Waste Policy
Act of 1982, the Safe Drinking Water Act, the Clean Air Act, or the Toxic
Substances Control Act, including, without limitation, petroleum, crude oil
fractions, asbestos-containing materials, radon gas and radioactive materials.
I.70 "Hazardous Material Activities" means any and all Remedial Activities
-----------------------------
and any and all transportation, transfer, recycling, storage, use, handling,
treatment, manufacture, investigation, removal, remediation, emission to air,
discharge to soil, surface water and/or ground water, release, exposure of
others to, sale, or distribution of any Hazardous Material, any Contamination,
or any product or waste containing a Hazardous Material.
I.71 "HIPAA" has the meaning set forth in Section 8.2 hereof.
-----
I.72 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
-------
1976, as amended (including, without limitation, any successor act), and the
rules and regulations promul gated thereunder, as the same may be in effect
from time to time.
I.73 "Indemnified Buyer Group" has the meaning set forth in Section 10.2
-----------------------
hereof.
I.74 "Indemnified Claims" has the meaning set forth in Section 10.4
------------------
hereof.
I.75 "Indemnified Seller Group" has the meaning set forth in Section 10.4
------------------------
hereof.
I.76 "Indenture" means that certain Indenture, dated as of June 15, 1997,
---------
by Buyer to Norwest Bank Minnesota, National Association, as trustee thereunder,
with respect to certain subordinated debt securities of Buyer.
I.77 "Independent Accounting Firm" has the meaning set forth in Section
---------------------------
6.4 hereof.
I.78 "Intellectual Property" means any or all of the following and all
---------------------
rights in, arising out of, or associated therewith: (i) all United States and
foreign patents and utility models and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and continuations-
in-part thereof, and re-examinations and equivalent or similar rights anywhere
in the world in inventions and discoveries ("Patents"); (ii) all inventions
-------
(whether patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data and customer
lists, and all documentation embodying or evidencing any of the foregoing except
to the extent any of the foregoing is embodied within an issued Patent ("Trade
-----
Secrets"); (iii) all copyrights, copyright registrations and applications
-------
therefor and all other rights corresponding thereto throughout the world
("Copyrights"); (iv) all mask works, mask work registrations and applications
------------
therefor, and any equivalent or similar rights in semiconductor masks,
-7-
<PAGE>
layouts, architectures or topology ("Maskworks"); (v) all industrial designs and
---------
any registrations and applications therefor throughout the world; (vi) all trade
names, logos, common law trademarks and service marks, trademark and service
mark registrations and applications therefor and all goodwill associated
therewith throughout the world ("Trademarks"); (vii) all databases and data
----------
collections and all rights therein throughout the world; (viii) all computer
software including all source code, object code, firmware, development tools,
files, records and data, all media on which any of the foregoing is recorded;
(ix) all World Wide Web addresses, Uniform Resource Locators, and domain names;
and (x) any similar, corresponding or equivalent rights to any of the foregoing
anywhere in the world.
I.79 "Issue Price" has the meaning set forth in Section 3.4 hereof.
-----------
I.80 "Italian and Singapore Transferred Business Employees" has the
----------------------------------------------------
meaning set forth in Section 8.2 hereof.
I.81 "Italian Newco" has the meaning set forth in Section 6.1 hereof.
-------------
I.82 "Italian Operating Company" means Texas Instruments Italia S.p.A.
-------------------------
I.83 "Joint Venture Assets" for each Joint Venture means the Joint Venture
--------------------
Facilities and all of the other tangible assets shown on the balance sheet for
such Joint Venture.
I.84 "Joint Venture Facilities" means the facilities owned or leased by
------------------------
any of the Joint Ventures.
I.85 "Joint Ventures" means TECH and KTI.
--------------
I.86 "JV Agreements" means the KTI Agreements and TECH Agreements.
-------------
I.87 "JV Amendments" means the TECH Amendments and the KTI Amendments.
-------------
I.88 "JV Audited Financial Statements" has the meaning set forth in
-------------------------------
Section 4.2(h) hereof.
I.89 "JV Financial Statements" has the meaning set forth in Section 4.2(h)
-----------------------
hereof.
I.90 "JV Interests" means the entire ownership interest held by Seller,
------------
its Subsidiaries or any of their Affiliates in the Joint Ventures.
I.91 "JV Interim Financial Statements" has the meaning set forth in
-------------------------------
Section 4.2(h) hereof.
I.92 "JV Material Adverse Effect" means (i) a material adverse effect on
--------------------------
the financial condition, business, operations (but not including results of
operations), or the ability to manufacture and supply Memory Products of either
KTI or TECH, or both, as the context requires, as
-8-
<PAGE>
manufactured and supplied to Seller on the date hereof, in all cases on a
standalone basis with respect to each entity, or (ii) a material adverse effect
on the ability of either Joint Venture to perform its obligations under any of
the JV Agreements or the JV Amendments.
I.93 "JV Permits and Approvals" has the meaning set forth in Section
------------------------
4.2(l) hereof.
I.94 "JV Transfer Agreements" has the meaning set forth in Section 4.2
----------------------
hereof.
I.95 "KTI" means KTI Semiconductor, a corporation organized under the laws
---
of Japan.
I.96 "KTI Agreements" means the KTI Shareholders' Agreement together with
--------------
all of the agreements entered into by any of the parties thereto (or any of
their respective Affiliates) in connection with KTI (including related supply
agreements), as amended through the date hereof.
I.97 "KTI Amendments" means the amendments to the KTI Agreements to be
--------------
executed at or prior to the Closing in accordance with Section 6.12 hereof, as
contemplated by the agreement dated April 21, 1998 among Seller, Buyer and Kobe
Steel Limited.
I.98 "KTI Shareholders' Agreement" means the Shareholders' Agreement,
---------------------------
dated March 19, 1990, between Seller and Kobe Steel, Ltd., as amended.
I.99 "Law" means all laws, statutes, ordinances, regulations, and other
---
pronouncements having the effect of law of the United States of America, Italy,
the Republic of Singapore, Japan, India or any other country or territory, or
domestic or foreign state, province, commonwealth, city, country, municipality,
territory, protectorate, possession, court, tribunal, agency, government,
department, commission, arbitrator, board, bureau, or instrumentality thereof.
I.100 "Leased Facilities" means the facilities used in the Business as
-----------------
currently conducted to be leased pursuant to this Agreement and/or the
Transition Services Agreement by a member of the Buyer Operating Group on or
after the Closing, including the parking privileges and other appurtenances of
every kind thereto and all security and other prepayments and deposits arising
thereunder or in connection therewith.
I.101 "Liability" means all debts, liabilities, Losses, Claims, damages,
---------
costs, expenses and obligations of every kind, whether fixed or contingent,
mature or unmatured, or liquidated or unliquidated, including, without
limitation, those arising under any Law and those arising under any contract,
commitment or undertaking.
I.102 "Licensed IP" has the meaning set forth in Section 6.15 hereof.
-----------
I.103 "Liens" means any mortgage, pledge, security, interest, encumbrance,
-----
lien (statutory or other), conditional sale agreement or other adverse claim of
any kind.
-9-
<PAGE>
I.104 "Loss" or "Losses" means any and all deficiencies, judgments,
----------------
settlements, demands, claims, actions or causes of action, assessments,
liabilities, losses, damages (other than consequential damages), interest,
fines, penalties, costs and expenses, including, without limitation, reasonable
legal, accounting and other costs and expenses incurred in connection with
investigating, defending, settling or satisfying any and all demands, claims,
actions, causes of action, suits, proceedings, assessments, judgments or
appeals.
I.105 "March Balance Sheet" means the unaudited balance sheet as at March
-------------------
31, 1998 with respect to the Business on a combined basis (including the JV
Interests as an equity investment) delivered by Seller to Buyer prior to the
date hereof and attached as Exhibit D hereto.
I.106 "Maskworks" has the meaning set forth in Section 1.78 hereof.
---------
I.107 "Material Adverse Effect" means a material adverse effect on the
-----------------------
business, operations, results of operations, financial condition, all assets
(including intangible assets) of the Business, taken as a whole, or liabilities
of the Business, taken as a whole, or on Buyer's ability to own, use or operate
the Acquired Assets, taken as a whole, or the Business in substantially the same
manner as the Seller Group owned, used or operated the Acquired Assets and the
Business on the date hereof, or on the ability of the Joint Ventures to
manufacture and supply Memory Products to Buyer in the same manner and in the
same quantity as manufactured and supplied on the date hereof.
I.108 "Maximum Amount" has the meaning set forth in Section 10.2 hereof.
--------------
I.109 "Memory Products" means any standalone DRAM, EPROM or flash EPROM
---------------
semiconductor product whether in discrete IC form or modular form, such as a
SIMM; provided, however, that Memory Products shall not include DRAM, EPROM or
-------- -------
flash EPROM products which Seller is contractually obligated, as of June 10,
1998, to purchase from Texas Instruments-Acer Incorporated or any successor
company thereto in accordance with the Transition Agreement (the "Transition
Agreement"), dated March 3, 1998, by and among Seller, Acer Incorporated, a
corporation organized under the laws of the Republic of China and Texas
Instruments-Acer Incorporated, a corporation organized under the laws of the
Republic of China and Seller, as amended by the amendments to such Transition
Agreement, dated June 10, 1998.
I.110 "Newco Shares" means all issued and outstanding capital stock of
------------
Italian Newco and Singapore Newco.
I.111 "Non-Assignable Contract" has the meaning set forth in Section
-----------------------
6.31(b) hereof.
I.112 "Notes" has the meaning set forth in Section 3.4 hereof.
-----
I.113 "Notice of Objection" has the meaning set forth in Section 6.4
-------------------
hereof.
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<PAGE>
I.114 "Operating Group" means Singapore Operating Company, Italian
---------------
Operating Company and Twinstar.
I.115 "Owned Facilities" means the facilities identified in Section 4.1(n)
----------------
of the Seller Disclosure Letter, including (i) the improvements and structures
located thereon, (ii) all easements, and appurtenances in favor of or
benefitting said property or any portion thereof, and (iii) for purposes of
Section 2.1 only, the owner's right, title and interest in (A) all furniture,
fixtures, fittings apparatus, equipment, machinery, fire safety, data
transmission, security, electrical, water, sewer, gas and other utility systems,
leases, and other items of tangible and personal property located on, attached
to, used in connection with, required for the operation of, or arising as a
consequence of the ownership, operation, maintenance, management of said land
and improvements, (B) any deposits, prepayments, intangible personal property,
guaranties, warranties, and contracts now or hereafter arising in connection
with ownership, use or operation of such property, to the extent designated by
Buyer, in its sole discretion, as included in the Acquired Assets, and (C) any
lease rights (including, without limitation, the lessor's interest in and to all
tenant leases, subleases and tenancies, including all amendments, modifications,
agreements, records, substantive correspondence, and other documents affecting
in any way a right to occupy any portion of said land and improvements and the
lessor's interest in all security deposits and prepaid rent, if any, under said
leases, and any and all guaranties of said leases).
I.116 "Patents" has the meaning set forth in Section 1.78 hereof.
-------
I.117 "Permits and/or Approvals" means certificates, exemptions, orders,
------------------------
permits, licenses, clearances, authorizations, consents and approvals required
by or from any Governmental Agency (including Governmental Approvals) or other
Person which is required for the conduct of the designated activity.
I.118 "Permitted Liens" means, with respect to the Owned Facilities, Liens
---------------
for Taxes not yet due and payable or being contested in good faith for which
reserves have been taken on the Closing Balance Sheet, those Liens specifically
enumerated in Section 1.118 of the Seller Disclosure Letter, and any Liens
created by Buyer at or prior to the Closing, and for all other Acquired Assets,
(i) Liens specifically enumerated in Section 1.118 of the Seller Disclosure
Letter relating to the assets of Singapore Newco and Italian Newco, (ii) Liens
of landlords, carriers, warehousemen, mechanics, and materialmen arising by
operation of law in the ordinary course of business for sums not yet due and
payable, (iii) encumbrances and exceptions to title set forth in Section 1.118
of the Seller Disclosure Letter, (iv) Liens on the date hereof intended by Buyer
and Seller to be released at or prior to the Closing; provided, however, that
-------- -------
all such Liens are actually released at or prior to the Closing, (v) any Liens
created by Buyer at or prior to the Closing and (vi) other Liens or
imperfections to title which do not materially impair the use of such property
for the conduct of the Business.
-11-
<PAGE>
I.119 "Person" means any individual, corporation, limited liability
------
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or Governmental Agency.
I.120 "Pre-Closing Period" has the meaning set forth in Section 7.2
------------------
hereof.
I.121 "Pre-Closing Seller Operations" means activities of every type
-----------------------------
conducted in the course of or in connection with the Business on or prior to the
Closing Date, wherever the same shall have been conducted, including, but not
limited to, the product development, manufacturing, assembly, research,
shipping, product marketing and sales, leasing and Hazardous Material Activities
of the Business.
I.122 "Preliminary Balance Sheet" has the meaning set forth in Section 6.4
-------------------------
hereof.
I.123 "Price Allocation" has the meaning set forth in Section 6.18 hereof.
----------------
I.124 "Proceeding" means any suit, action, arbitration, mediation,
----------
administrative, or other proceeding before any Governmental Agency.
I.125 "Registered Intellectual Property" means all United States,
--------------------------------
international and foreign: (i) registered Trademarks, service marks or trade
names, applications to register Trademarks, service marks or trade names,
intent-to-use applications, or other registrations or applications related to
Trademarks, service marks or trade names; (ii) registered Copyrights and
applications for Copyright registration; (iii) any mask work registrations and
applications to register mask works; (iv) Uniform Resource Locators, World Wide
Web site addresses and domain names; and (v) any other Intellectual Property
that is the subject of an application, certificate, filing, registration or
other document issued by, filed with, or recorded by, any state, government or
other public legal authority, other than Patents and applications for Patents.
I.126 "Related Agreements" means the JV Amendments, the Securities Rights
------------------
and Restrictions Agreement, the Transition Services Agreement (including all of
the agreements to be delivered pursuant thereto) and the Cross-License
Agreement.
I.127 "Remedial Activities" means any sampling, testing, investigation,
-------------------
feasibility study, health assessment, risk assessment, construction activity,
installation, encapsulation, removal, excavation, treatment, discharge,
disposal, removal, transportation, monitoring and remediation thereto of
Contamination or any Hazardous Material from, in or on any real property, or the
soil, groundwater, surface water, ambient air, indoor air, or building materials
thereof.
I.128 "Reorganization" has the meaning set forth in Section 6.1 hereof.
--------------
I.129 "Reorganization Agreements" has the meaning set forth in Section 4.1
-------------------------
hereof.
I.130 "Required Utilities" has the meaning set forth in Section 4.1
------------------
hereof.
-12-
<PAGE>
I.131 "Requisite Regulatory Approvals" has the meaning set forth in
------------------------------
Section 9.1 hereof.
I.132 "Retained Environmental Liabilities" means all Losses, Claims, Liens
----------------------------------
and Liabilities to the extent arising out of any of the following:
(a) Contamination (i) present at any Acquired Facility or Joint
Venture Facility on or before the Closing Date, (ii) present at any Former
Facility (other than Contamination resulting from the Hazardous Material
Activities of Buyer and its Subsidiaries when they were Buyer's Subsidiaries at
the Former Facility), (iii) resulting from any condition or circumstance
existing prior to the Closing Date at, on, or about any Acquired Facility or
Joint Venture Facility which permits a release, emission or discharge of
Hazardous Materials into the environment after the Closing Date and which
constitutes, as of the Closing Date, a violation of any applicable Environmental
Requirements, or (iv) present at any time on any property as a consequence of
the migration, by any means and at any time, of any of the aforesaid
Contamination;
(b) any Hazardous Material Activity conducted in the course of the
Pre-Closing Seller Operations, any Hazardous Material Activity (other than a
Hazardous Material Activity conducted by Buyer or its Subsidiaries, when they
were Buyer's Subsidiaries at a Disposal Facility or a Former Facility) conducted
at any Acquired Facility or Joint Venture Facility, Disposal Facility (to the
extent of any Seller Group member's liability therefor as of the Closing Date)
or Former Facility at any time prior to the Closing Date, or any Hazardous
Material Activity conducted by any member of the Seller Group or their
respective Agents or Affiliates on or about any Acquired Facility or Joint
Venture Facility, Disposal Facility or Former Facility;
(c) the exposure of any Person (including without limitation any
employee of a Seller Group member, any Joint Venture or their Affiliates, Agents
or contractors) (1) to any Contamination described in subsection (a), above, or
(e) below at any time, (2) to any Hazardous Material released after the Closing
Date that results from a condition or circumstance (i) which exists on or before
the Closing Date, at, on, under or about the Acquired Facilities, or (ii) which
arises in connection with Pre-Closing Seller Operations, and (iii) which in
either case constitutes a violation as of the Closing Date of applicable
Environmental Requirements, (3) to a Hazardous Material in the course of any
Hazardous Material Activity described in subsection (b) above; without regard
(in any of the foregoing cases) to whether any effect of the exposure has been
manifested as of the Closing Date;
(d) the violation of any Environmental Requirement applicable to, or
the absence or violation of any Permits and/or Approval required for, (i) the
conduct of the Pre-Closing Seller Operations, (ii) the ownership, leasing, use
or occupancy of any Acquired Facility for the conduct of the Pre-Closing Seller
Operations, or (iii) any Hazardous Material Activity described in subsection
(b), above;
-13-
<PAGE>
(e) the presence of any Contamination or Hazardous Material at, on,
under, about, or migrating from or to any Disposal Facility, to the extent such
Contamination or Hazardous Material results from (i) Pre-Closing Seller
Operations, (ii) any Contamination described in subsection (a) above, (iii) any
Hazardous Material Activity described in subsection (b) above, or (iv) which is
otherwise the legal responsibility of any member of the Seller Group as of the
Closing Date; and/or
(f) any condition or facts described or disclosed by the Environmental
Reports identified in Section 1.132 of the Seller Disclosure Letter, or made
available by a Seller Group member to the Buyer or its Affiliates prior to the
Closing Date.
(g) Notwithstanding the foregoing, for the purpose of determining the
amount of any Buyer Indemnified Claim under Section 10.2 of this Agreement (i)
with respect to a Joint Venture Retained Environmental Liability of TECH, only
that portion of such Claim or Loss as a holder of a thirty percent (30%) equity
owner of TECH would incur by reason of its equity ownership interest will be
included hereunder as a Buyer Indemnified Claim under this Agreement and (ii)
with respect to a Joint Venture Retained Environmental Liability of KTI, only
that portion of such Claim or Loss as a holder of a twenty-five percent (25%)
equity owner of KTI would incur by reason of its equity ownership interest will
be included hereunder as a Buyer Indemnified Claim. For the purpose of the
foregoing "Joint Venture Retained Environmental Liabilities" shall mean those
Retained Environmental Liabilities described above, which arise out of (i) a
Joint Venture Facility of the applicable Joint Venture, (ii) Contamination or an
exposure at or from a Joint Venture Facility of the applicable Joint Venture,
(iii) a Disposal Facility or a Former Facility of the applicable Joint Venture
and/or (iv) the Hazardous Materials Activities of the applicable Joint Venture.
I.133 "Right and/or Claim" means all of the Seller Group's warranties,
------------------
deposits, rights of recovery, rights of set-off, Tax and other credits, and
other similar rights against third parties relating to the Acquired Assets.
I.134 "SEC" means the United States Securities and Exchange Commission.
---
I.135 "Securities" means the Buyer Common Stock, Convertible Notes and
----------
Subordinated Notes.
I.136 "Securities Act" means the Securities Act of 1933, as amended
--------------
(including, without limitation, any successor act), and the rules and
regulations promulgated thereunder, as the same may be in effect from time to
time.
I.137 "Securities Rights and Restrictions Agreement" means the agreement
--------------------------------------------
to be entered into between Seller and Buyer at the Closing substantially in the
form of Exhibit E hereto.
I.138 "Seller" has the meaning set forth in the Preamble hereof.
------
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<PAGE>
I.139 "Seller Disclosure Letter" means Seller's disclosure schedule to be
------------------------
delivered to Buyer pursuant to Section 6.10 of this Agreement.
I.140 "Seller Group" means Seller and the Operating Group and, upon their
------------
formation, Singapore Newco and Italian Newco.
I.141 "Seller Indemnified Claims" has the meaning set forth in Section
-------------------------
10.4 hereof.
I.142 "Seller Note Purchasing Subsidiary" has the meaning set forth in
---------------------------------
Section 6.1 hereof.
I.143 "Seller's Taxes" has the meaning set forth in Section 7.2 hereof.
--------------
I.144 "Seller's Year 2000 Plan" has the meaning set forth in Section
-----------------------
4.1(p)(xi) hereof.
I.145 "Shortfall" has the meaning set forth in Section 6.4 hereof.
---------
I.146 "Shutdown Costs" means any and all costs other than Sustaining
--------------
Costs, incurred in connection with the discontinuance of operations at the
Twinstar Facility, including, without limitation, costs incurred in connection
with the termination or modification of any Contracts, the return or other
disposition of any materials, supplies, inventory or waste, the termination of
any employees, the return or revocation of any tax abatements or other tax
privileges, or the payment of fees for professional services.
I.147 "Singapore Newco" has the meaning set forth in Section 6.1 hereof.
---------------
I.148 "Singapore Operating Company" means Texas Instrument Singapore
---------------------------
(Pte.) Limited.
I.149 "Straddle Period" has the meaning set forth in Section 7.2 hereof.
---------------
I.150 "Subordinated Notes" means the 6-1/2% Subordinated Notes due 2005 of
------------------
Buyer in substantially the form of Exhibit F, delivered or to be delivered to
Seller Note Purchasing Subsidiary at Closing pursuant to Section 3.4(a), such
notes to be limited to an aggregate principal amount of $210,000,000.
I.151 "Subsidiary" of a Person means any corporation or other entity of
----------
which the securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other Persons performing
similar functions are owned directly or indirectly by such Person.
I.152 "Successor" has the meaning set forth in Section 6.15 hereof.
---------
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<PAGE>
I.153 "Supplemental Indenture" means that certain second supplemental
----------------------
indenture to the Indenture to be executed by Buyer and Trustee thereunder at or
prior to the Closing, providing for the creation of the Convertible Notes, which
supplemental indenture shall be in substantially the form of Exhibit G hereto.
I.154 "Sustaining Costs" means costs incurred in connection with the
----------------
Twinstar Facility and personnel employed thereat during the period following the
discontinuance of operations at Twinstar to the Closing Date, including, without
limitation, costs for materials, repair and maintenance, salary, wages and
benefits of retained employees, depreciation, taxes, insurance and utilities and
other outside services.
I.155 "Target Amount" has the meaning set forth in Section 6.4 hereof.
-------------
I.156 "Target Closing Date" has the meaning set forth in Section 6.4
-------------------
hereof.
I.157 "Tax" or "Taxes" means any and all taxes, imposts, licenses, fees,
--------------
charges, levies, imposts, rates, penalties, assessments, or other charges,
including, without limitation, any sales, use, transfer, income, gross receipts,
registration, franchise, excise, real and personal property, ad valorem, custom,
documentary, stamp, duty, payroll, employment, unemployment insurance, social
security, recording, environmental, net worth, capital, withholding, backup
withholding, value-added, unitary, recapture, clawback, and any similar tax,
assessment, impost, fee or governmental charge and including all interest,
penalties, or additions thereto imposed or asserted directly or indirectly by
any Governmental Agency, whether or not disputed, and shall include any
liability arising as a result of being (or ceasing to be) a member of any
affiliated, consolidated, combined or unitary group or being included (or
ceasing to be included) in any Tax Return relating thereto.
I.158 "Tax Parameters" has the meaning set forth Section 6.18 hereof.
--------------
I.159 "Tax Proceedings" has the meaning set forth in Section 7.7 hereof.
---------------
I.160 "Tax Return" means any return, declaration, report, claim for
----------
refund, or information statement relating to Taxes including any schedule
attached thereto and any amendment thereto.
I.161 "TECH" means TECH Semiconductor Singapore Pte. Ltd., a company
----
organized under the laws of the Republic of Singapore.
I.162 "TECH Agreements" means the TECH Shareholders' Agreement together
---------------
with all of the agreements entered into by any of the parties thereto (or any of
their respective Affiliates) in connection with TECH (including related supply
agreements), as amended through the date hereof.
I.163 "TECH Amendments" means the amendments to the TECH Agreements to be
---------------
executed at or prior to the Closing as contemplated by Section 6.12 hereof.
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<PAGE>
I.164 "TECH Shareholders' Agreement" means the Shareholders' Agreement
----------------------------
dated April 11, 1991 among Seller, EDB, Hewlett-Packard Company and Canon Inc.,
as amended.
I.165 "Territory" has the meaning set forth in Section 6.25 hereof.
---------
I.166 "Texas Transferred Business Employees" has the meaning set forth in
------------------------------------
Section 8.2 hereof.
I.167 "Threshold Amount" has the meaning set forth in Section 10.2 hereof.
----------------
I.168 "Trade Secrets" has the meaning set forth in Section 1.78 hereof.
-------------
I.169 "Trademarks" has the meaning set forth in Section 1.78 hereof.
----------
I.170 "Transfer Tax or Taxes" means any and all Taxes, whenever arising,
---------------------
attributable to the transactions or events contemplated by this Agreement and
the Related Agreements, including, without limitation, the transactions and
events described in Articles II, III and VI hereof.
I.171 "Transferred Acquired Assets" means all Acquired Assets (including
---------------------------
capital stock) other than the Acquired Assets transferred to Italian Newco and
Singapore Newco in accordance with Section 6.1 hereof.
I.172 "Transferred Assumed Liabilities" means all Assumed Liabilities
-------------------------------
other than the Assumed Liabilities assumed by Italian Newco or Singapore Newco
in accordance with Section 6.1 hereof.
I.173 "Transferred Business Employees" means those employees who are
------------------------------
employed by Buyer, Italian Newco or Singapore Newco on and after the Closing
Date pursuant to acceptance of the offers of employment made under Section
8.1(a), (b) and (c) of this Agreement.
I.174 "Transferred Contract" has the meaning set forth in Section 6.31
--------------------
hereof.
I.175 "Transferred Contract Schedule" has the meaning set forth in Section
-----------------------------
6.31 hereof.
I.176 "Transition Agreement" has the meaning set forth in Section 1.109
--------------------
hereof.
I.177 "Transition Plan Year" has the meaning set forth in Section 8.5
--------------------
hereof.
I.178 "Transition Services" has the meaning set forth in Section 6.7
-------------------
hereof.
I.179 "Transition Services Agreement" means the transition services
-----------------------------
agreement (including the agreements referred to therein) to be entered into
between Buyer and Seller at the Closing in accordance with Section 6.7 hereof.
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I.180 "Twinstar" means Texas Instruments Richardson, LLC, a limited
--------
liability company organized under the laws of the state of Delaware, a successor
in interest to all of the assets and liabilities of the former joint venture
between Seller and Hitachi known as "Twinstar".
I.181 "Twinstar Facility" means Seller's fabrication facility with respect
-----------------
to the Business located in Richardson, Texas.
I.182 "Warn Act" has the meaning set forth in Section 8.5 hereof.
--------
I.183 "Working Capital" means, with respect to the Business, (i) current
---------------
assets which are included in the Acquired Assets, less (ii) the sum of all of
the current liabilities and noncurrent liabilities which are included within the
Assumed Liabilities other than up to 345,296 million Italian Lire principal
amount of indebtedness for borrowed money directly related to Seller's assets in
Italy constituting Acquired Assets.
I.184 "Working Capital Reduction" has the meaning set forth in Section 6.4
-------------------------
hereof.
I.185 "Working Capital Requirement" has the meaning set forth in Section
---------------------------
6.4 hereof.
ARTICLE II
THE ACQUISITION
II.1 Transfer of Assets. Upon the terms and subject to the conditions set
------------------
forth in this Agreement, at the Closing, Seller shall, and, after giving effect
to the Reorganization, shall cause each member of the Operating Group to, sell,
assign, transfer, convey and deliver to Buyer, or its designees, and Buyer, or
such designees, shall purchase and accept from Seller and each member of the
Operating Group all right, title and interest in the Transferred Acquired
Assets, wherever located, free and clear of all Liens other than Permitted
Liens.
II.2 Assumption of Liabilities. Upon the terms and subject to the
-------------------------
conditions set forth in this Agreement, at the Closing, Buyer, or its designees,
shall assume the Transferred Assumed Liabilities. Buyer does not assume, and
shall have no obligation or responsibility for, any Liabilities of any member of
the Seller Group, whether arising before or after the Closing, except as
otherwise expressly provided in this Agreement. From and after the Closing,
Buyer shall be responsible for, and Buyer hereby agrees to pay, perform and
discharge the Transferred Assumed Liabilities, other than the Excluded
Liabilities.
ARTICLE III
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THE CLOSING
III.1 Time and Place of Closing. Unless this Agreement shall have been
-------------------------
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Article XI, and subject to the satisfaction or waiver of the
conditions set forth in Article IX, the Closing shall take place at 11:59 p.m.,
California time (the "Closing Time"), on the third Business Day after
satisfaction or waiver of the conditions set forth in Article IX, at the offices
of Wilson Sonsini Goodrich & Rosati, Professional Corporation, located at 650
Page Mill Road, Palo Alto, California 94304-1050, or at such other place and
time as may be mutually agreed to by the parties hereto. The sale, assignment,
transfer, conveyance and delivery of the Transferred Acquired Assets to, and the
assumption of the Transferred Assumed Liabilities by, Buyer, or its designees,
each as herein provided, shall be effected at the Closing Time.
III.2 Closing Date Deliveries of Seller. At the Closing, Seller shall,
---------------------------------
and shall cause each member of the Seller Group as may be appropriate to,
deliver to Buyer or its designee the following:
(a) the Transferred Acquired Assets;
(b) Certificates representing all of the capital stock of Singapore
Newco together with a duly executed stock power assigning at the Closing
ownership thereof to Buyer, or a designee of Buyer;
(c) Certificates representing all of the capital stock of Italian
Newco together with a duly executed stock power assigning at the Closing
ownership thereof to Buyer, or a designee of Buyer;
(d) Certificates representing all of Seller's capital stock in each of
TECH and KTI together with a duly executed stock powers assigning at the Closing
ownership thereof to Buyer, or a designee of Buyer;
(e) duly executed Related Agreements;
(f) such executed deeds, bills of sale, assignments or other
instruments of transfer and assignment, and releases as are reasonably necessary
to consummate the sale and transfer of the Transferred Acquired Assets
contemplated by this Agreement, all in form and substance reasonably
satisfactory to Buyer and its counsel;
(g) the copy of resolutions of the board of directors of Seller and
each member of the Seller Group (and, in the case of Singapore Operating
Company, a copy of resolutions of a general meeting of the shareholders thereof)
authorizing the execution, delivery and performance of this Agreement, the
Related Agreements and each other agreement, document or certificate to which it
is a party and is required to be delivered pursuant hereto or in connection
herewith and authorizing the consummation of the transactions contemplated
hereby and thereby by Seller and
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each member of the Seller Group and a certificate of the secretary of Seller,
dated the Closing Date, to the effect that such resolutions were duly adopted
and are in full force and effect;
(h) a certificate, dated the Closing Date, from an executive officer
of Seller to the effect that Seller has fulfilled the conditions set forth in
Section 9.2 hereof;
(i) to the extent held by or under the control of Seller or any member
of the Operating Group all of the books and records of the Seller Group included
in the Acquired Assets;
(j) an affidavit, duly executed by Seller, attesting that Seller is
not a "foreign person" within the meaning of Code Section 1445(e)(3) and is not
subject to withholding under any state or U.S. Tax law, in form reasonably
acceptable to Buyer; and
(k) the Closing Statement in form and substance satisfactory to Buyer.
III.3 Closing Date Deliveries of Buyer. At the Closing, Buyer shall, and
--------------------------------
shall cause each of its designees as may be appropriate to, deliver to Seller
the following:
(a) 28,933,092 fully paid and nonassessable unregistered shares of
Buyer Common Stock less the number of shares, if any, delivered by Buyer
pursuant to Section 3.4(a) hereof;
(b) Convertible Notes in an aggregate principal amount of $740 million
less the aggregate principal amount of Convertible Notes delivered by Buyer
pursuant to Section 3.4(a) hereof;
(c) duly executed Related Agreements;
(d) such executed assignment and assumption instruments as are
reasonably necessary to consummate the assumption of the Assumed Liabilities
contemplated by this Agreement, all in form and substance reasonably
satisfactory to Seller and its counsel;
(e) the copy of resolutions of the board of directors of Buyer, or its
designees as may be appropriate, authorizing the execution, delivery and
performance of this Agreement, and each other agreement, document or certificate
to which it is a party and is required to be delivered pursuant hereto or in
connection herewith and authorizing the consummation of the transactions
contemplated hereby and thereby by Buyer and a certificate of the secretary of
Buyer, dated the Closing Date, to the effect that such resolutions were duly
adopted and are in full force and effect; and
(f) a certificate dated the Closing Date, from an executive officer of
Buyer to the effect that Buyer has fulfilled the conditions set forth in Section
9.3 hereof.
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III.4 Purchase and Sale of Notes. At the Closing, in addition to the
--------------------------
deliveries set forth in Section 3.2 and Section 3.3 hereof:
(a) Buyer shall deliver to Seller Note Purchasing Subsidiary (i) $210
million aggregate principal amount of Subordinated Notes, and (ii) Convertible
Notes in an aggregate principal amount (not to exceed $740 million) such that
the fair market value (as of the Closing Date) of the Subordinated Notes and the
Convertible Notes (collectively the "Notes") delivered pursuant to this Section
3.4(a) equals U.S. $750 million. If the fair market value of all the
Subordinated Notes and all the Convertible Notes is less than U.S. $750 million,
Buyer shall also deliver to Seller Note Purchasing Subsidiary an appropriate
number of shares (determined in accordance with Exhibit H) of fully paid and
nonassessable unregistered shares of Buyer Common Stock, such that the aggregate
fair market value of the consideration delivered pursuant to this Section 3.4(a)
equals U.S. $750 million. Notwithstanding anything to the contrary contained
herein, in no event shall Buyer be obligated or otherwise committed to issue to
Seller, or any other Person, in connection with the transactions contemplated
hereby, more than 28,933,092 shares of Buyer Common Stock.
(b) Seller shall cause Seller Note Purchasing Subsidiary to deliver to
Buyer U.S. $750 million of immediately available funds by wire transfer to an
account designated to Seller Note Purchasing Subsidiary by Buyer in writing not
later than two Business Days prior to the Closing Date (the "Cash Payment").
The Notes shall be treated as debt instruments and the portion thereof delivered
to Seller Note Purchasing Subsidiary shall be treated as having an aggregate
issue price for purposes of Code Section 1273 (and the regulations promulgated
thereunder) equal to the Cash Payment less any portion of such Cash Payment
attributable to Buyer Common Stock delivered pursuant to the last sentence of
Section 3.4(a); the issue price per $1,000 of principal amount Notes (the "Issue
Price") shall be equal to the product of $1,000 and a fraction whose numerator
is $750 million and whose denominator is the aggregate stated principal amount
of the Notes delivered to Seller Note Purchasing Subsidiary pursuant to Section
3.4(a) hereof. This fraction shall be appropriately adjusted in the event Buyer
Common Stock is delivered to Seller Note Purchasing Subsidiary pursuant to the
last sentence of Section 3.4(a). The issue price of the portion of the
Convertible Notes not delivered to the Seller Note Purchasing Subsidiary shall
also be the Issue Price.
(c) For purposes of Section 3.4 (a), the fair market value of the
Notes (and thus the amount of Convertible Notes to be purchased by Seller Note
Purchasing Subsidiary) shall be determined in good faith by Buyer and based upon
the advice of its financial advisors and reasonably agreed to by Seller (the
"Debt Valuation"). Each party hereto shall (and shall cause its respective
Affiliates to) adopt and abide by the provisions of this Section 3.4 at their
own expense, including without limitation the Debt Valuation and Issue Price (as
determined herein) for purposes of all Tax Returns filed by them and shall not
take any position inconsistent therewith in connection with any examination of
any Tax Return, any refund claim, any judicial litigation proceeding but only if
doing otherwise in such judicial litigation proceeding would materially
prejudice the other party, or otherwise until there has been a final
"determination" (within the meaning of Code Section 1313(a))
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or any other event which finally and conclusively establishes the value of the
Notes. In the event that the position being taken in accordance with this
Section 3.4 is being challenged by any Taxing authority, the party receiving
notice of the dispute shall promptly notify the other parties hereto of such
dispute and the parties hereto shall consult with each other concerning
resolution of the dispute.
(d) For thirty-one (31) days after the Closing Date, Seller and Seller
Note Purchasing Subsidiary will not sell, dispose, enter into a forward
contract, put option or otherwise reduce their risk of loss with respect to the
Notes.
III.5 Subsequent Documentation. Seller shall, at any time and from time
------------------------
to time after the Closing Date, upon the request of Buyer, do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, all such further deeds, assignments, transfers and other instruments
of transfer and conveyance as may be required for the assigning, recording,
transferring, granting and conveying to Buyer or its successors and assigns, or
for aiding and assisting in collecting and reducing to possession, any or all of
the Acquired Assets.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as disclosed in the Seller Disclosure Letter (which shall make
specific reference to only that particular representation and warranty as to
which each disclosure included therein relates and, to the extent any disclosure
included therein relates to more than one representation or warranty, such
disclosure letter shall include a specific cross-reference to the other
representations or warranties to which such disclosure relates), Seller
represents and warrants to the Buyer as set forth below:
IV.1 Representations and Warranties Relating to the Seller Group.
-----------------------------------------------------------
(a) Organization and Qualification. Each member of the Seller Group
------------------------------
is a corporation or limited liability company duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to own, operate and lease the
Acquired Assets and to conduct the Business as it is now being conducted.
Within 30 days after the date hereof, true, correct and complete copies of the
Certificate of Incorporation (or similar documents) and By-laws (or similar
documents) of each member of the Seller Group, each with all amendments thereto,
have been delivered to Buyer. Each member of the Seller Group is duly qualified
or licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the Acquired Assets or the nature of
its activities makes such qualification or license necessary, except where the
failure to be so qualified or licensed would not, individually or in the
aggregate, have a Material Adverse Effect. A complete list of all such
jurisdictions pertaining to the Operating Group is set forth in Section 4.1(a)
of the Seller Disclosure Letter.
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<PAGE>
(b) Corporate Authority.
-------------------
(i) Each member of the Seller Group has all requisite corporate
power and authority to enter into, execute and deliver this Agreement, the JV
Transfer Agreements and the Related Agreements, to perform its obligations
hereunder and thereunder, and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Related
Agreements by each member of the Seller Group, the performance by each member of
the Seller Group of its obligations under this Agreement and the Related
Agreements, and the consummation of the transactions contemplated hereby and
thereby have been (in the case of Seller and will be, prior to the Closing in
the case of the Seller Group (other than Seller)) duly and validly authorized by
all necessary corporate action on the part of each member of the Seller Group
and (assuming due execution and delivery by the Buyer of this Agreement and the
Related Agreements) this Agreement constitutes, and the Related Agreements when
executed and delivered will constitute, legal, valid and binding obligations of
each member of the Seller Group enforceable against such member in accordance
with their terms. No approval by the stockholders of Seller is required with
respect to the execution and delivery by any member of the Seller Group of this
Agreement and the Related Agreements, and the performance by each member of the
Seller Group of their respective obligations hereunder and thereunder.
(ii) Seller has, and at the Closing each member of the Seller
Group that is to be a party to any of the agreements delivered in connection
with the Reorganization (the "Reorganization Agreements") will have full
corporate power and authority to enter into, execute and deliver each
Reorganization Agreement to which such Seller Group member shall be a party, to
perform such Seller Group member's obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery of each
Reorganization Agreement, the performance of such Seller Group member's
obligations thereunder, and the consummation of the transactions contemplated
thereby, have been or with respect to Italian Newco and Singapore Newco, will be
at the Closing Time, duly and validly authorized by all necessary corporate
action of such Seller Group member. Each such Seller Group member on or prior
to the Closing Date will have duly executed and delivered each such
Reorganization Agreement to which such Seller Group member shall be a party.
Each Reorganization Agreement when so executed and delivered will constitute the
legal, valid and binding obligation of each such Seller Group member party
thereto, enforceable against each such Seller Group member in accordance with
its respective terms, subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium and similar Laws affecting
creditors' rights, and, with respect to the remedy of specific performance,
equitable doctrines applicable thereto.
(c) Capitalization. Upon the issuance of capital stock by Italian
--------------
Newco to Italian Operating Company and Singapore Newco to Singapore Operating
Company upon the completion of the Reorganization, and immediately prior to the
Closing (i) all of the capital stock of Italian Newco will be validly issued,
fully paid and nonassessable free and clear of all liens and (ii) Seller,
directly or indirectly, will own beneficially all of the outstanding capital
stock and equity interests
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of Italian Newco and Singapore Newco as evidenced by the Newco Shares. Upon the
Closing, Italian Newco and Singapore Newco will not have any Subsidiaries. At
the Closing Time (i) there will be no preemptive or similar rights with respect
to the securities of Italian Newco or Singapore Newco, (ii) there will be no
subscriptions, options, warrants, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind obligating any member of
the Seller Group or any other Person, contingently or otherwise, to issue or
sell, or cause to be issued or sold, any shares of capital stock of any class of
Italian Newco or Singapore Newco, or any securities convertible into or
exchangeable for any such shares, and (iii) there will be no outstanding
contractual or other rights or obligations to or of any member of the Seller
Group or any other Person to repurchase, redeem or otherwise acquire any
outstanding shares of Italian Newco or Singapore Newco.
(d) No Violations. The execution and delivery of this Agreement, the
-------------
Related Agreements and the Reorganization Agreements by each member of the
Seller Group party thereto, the performance by any member of the Seller Group of
its obligations under this Agreement, the Related Agreements or any of the
Reorganization Agreements and the consummation of the transactions contemplated
hereby or thereby, do not and will not conflict with, contravene, result in a
violation or breach of or default under (with or without the giving of notice or
the lapse of time or both), create in any other Person a right of claim of
termination, amendment, or require modification, acceleration or cancellation
of, or result in the creation of any Lien (or any obligation to create any Lien)
upon any of the properties or assets of any member of the Seller Group under (i)
any provision of any of the organizational documents of any member of the Seller
Group, (ii) any Law applicable to any member of the Seller Group or any of their
respective properties or assets assuming the consents, approvals, authorizations
or permits and filings or notifications set forth in Sections 4.1(g) and 4.1(h)
of the Seller Disclosure Letter are duly and timely obtained or made, (iii)
except as to which requisite waivers or consents have been obtained, and except
for the consents and approvals required under the agreements and instruments
listed in Section 4.1(g) of the Seller Disclosure Letter, any Contract, to which
any member of the Seller Group is a party or by which any of their respective
properties or assets may be bound; other than any of the foregoing under clauses
(ii) and (iii) which would not (A) result in a Liability of $100,000 in any one
case or $500,000 in the aggregate, or (B) individually or in the aggregate have
a Material Adverse Effect or (C) individually or in the aggregate, have a
material adverse effect on the ability of any member of the Seller Group to
perform its obligations under this Agreement, the Related Agreements or the
Reorganization Agreements. Except as set forth in Section 4.1(d) of the Seller
Disclosure Letter, neither the execution and delivery of this Agreement, the
Related Agreements or the Reorganization Agreements by any member of the Seller
Group, nor the consummation of the transactions contemplated hereby or thereby,
will result in the Loss to the Buyer of any material benefit enjoyed by any
member of the Seller Group in connection with the Business or the Acquired
Assets.
(e) Sufficiency of Acquired Assets; Title and Transfer.
--------------------------------------------------
(i) Section 4.1(e) of the Seller Disclosure Letter sets forth (a)
a true, correct and complete list of the Acquired Assets (in each case other
than assets with a value of
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$10,000 or less singularly), (b) the member of the Seller Group which owns such
asset and (c) the member of the Seller Group which shall hold such asset
immediately prior to the Closing. Except as set forth in Section 4.1(e) of the
Seller Disclosure Letter, the Acquired Assets, together with the Cross-License
Agreement, the rights to be granted under licenses pursuant to this Agreement,
the Transferred Contracts and the properties and services to be provided to the
Buyer Operating Group under the Transition Services Agreement, constitute all of
the rights, services, properties and assets (real, personal and mixed, tangible
and intangible) that are used in or necessary to conduct the Business as
currently conducted. Except as set forth in Section 4.1(e) of the Seller
Disclosure Letter, (i) each member of the Seller Group has good and valid title
or a valid leasehold interest in all of the Acquired Assets indicated as held by
such member therein, and none of the Acquired Assets is subject to any Lien of
any kind as of such date, except for Permitted Liens, and (ii) each member of
the Seller Group will have good and valid title or a valid leasehold interest in
all of the Acquired Assets indicated as to be held by such member in Section
4.1(e) of the Seller Disclosure Letter immediately prior to the Closing, and
none of the Acquired Assets will be subject to any Lien of any kind at such time
except for Permitted Liens.
(ii) After giving effect to the Reorganization, each of Italian
Newco and Singapore Newco shall have only those specific liabilities and
obligations that constitute Assumed Liabilities.
(iii) At the time of the Closing, Italian Operating Company and
Seller will have the right, power and authority to sell, transfer and assign the
Newco Shares pursuant to this Agreement. The delivery of the Newco Shares to
Buyer or its designee against payment therefore as contemplated by Section 6.1
will transfer to Buyer or its designee good and valid title to, and beneficial
ownership of, all of the Newco Shares. The sale of the Newco Shares will not
give rise to any preemptive rights or rights of first refusal.
(iv) In addition to the valid conveyance of the Newco Shares as
described in Section 4.1(e)(ii) and the valid conveyance of the JV Interests as
described in Section 4.2(e), upon the Closing, Seller will convey, assign,
transfer and deliver to the Buyer or its designees good and valid title to all
other Acquired Assets, free and clear of all Liens, except for Permitted Liens.
(f) Contracts.
---------
(i) Section 4.1(f) of the Seller Disclosure Letter sets forth a
true, correct and complete list of all Contracts primarily relating to or
primarily used in the Business of the following types (and includes with respect
to each such Contract the names of the parties, the date of the Contract, and
all amendments, supplements or modifications thereto):
(A) Employment agreements and any offers of employment
providing for annual payment in excess of $200,000 per year;
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(B) Consulting agreements which provide for annual payments in excess
of $100,000 per year;
(C) Royalty agreements, other than those relating to Patent licenses,
which provide for annual payments in excess of $50,000 per year;
(D) Agreements or commitments for capital expenditures or the
acquisition by purchase or lease of fixed assets (i) involving payments in
excess of $100,000 each in any one-year period or (ii) in the case of operating
leases and capital leases, involving payments in excess of $100,000 each in any
one-year period;
(E) (i) Agreements for the purchase, sale, lease or other transfer of
any real or personal property, products, materials, supplies or services
involving payments of in excess of $500,000 in any one-year period, and (ii)
supply and/or sourcing contracts if the obligee thereunder is among the top
twenty (20) suppliers (in terms of accounts payable of the Business on a
consolidated basis) of the Business in the last fiscal year;
(F) Joint venture, joint development or partnership agreements with
any other Person with respect to the Business, including without limitation the
KTI Agreements and TECH Agreements;
(G) Noncompetition agreements;
(H) Agreements relating to research and development concerning the
Business by any member of the Seller Group for others or by others for any
member of the Seller Group;
(I) Contracts relating to debt, bank financing and similar
arrangements (including guarantees) of (i) a member of the Operating Group, or
(ii) any other member of the Seller Group directly related to the Business
(including either Joint Venture);
(J) Any foreign currency exchange or forward purchase agreements of
(i) a member of the Operating Group, or (ii) any other member of the Seller
Group directly related to the Business (including either Joint Venture);
(K) Volume purchase and master purchase agreements related to the
Business in excess of $500,000 in any twelve-month period;
(L) Maintenance agreements primarily related to the Business in excess
of $200,000 in any twelve-month period;
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(M) Agreements providing primarily for indemnification obligations by
any member of the Seller Group with respect to the sale of products of or
otherwise related to the Business;
(N) Agreements providing for indemnification or guaranty obligations
of the Seller Group with respect to Hazardous Material Activities or Remedial
Activities in connection with the Business other than in the ordinary course of
business having a potential cost in excess of $100,000 for one site or $500,000
in the aggregate for all sites;
(O) Agreements that by their terms do not terminate prior to one (1)
year after the date of this Agreement;
(P) Requirements contracts relating to obligations to purchase all or
substantially all of any product as well as to supply all or substantially all
of any product;
(Q) All non-disclosure agreements relating to the Business including
Memory Products and/or processes or other technology used in the manufacture of
Memory Products including, without limitation, non-disclosure agreements
relating to the operations of the Business at any location;
(R) Leases or subleases having a total unpaid rental obligation
exceeding $100,000 individually or $500,000 in the aggregate (not otherwise
listed in the foregoing), mortgages, or other Liens securing monetary
obligations in excess of $200,000 encumbering the Seller Group's interests in
the Acquired Facilities (other than Liens encumbering only the right, title, and
interest of any Person other than a Seller Group member in a Leased Facility),
the assets of the Operating Group, Singapore Newco, Italian Newco or the
Acquired Assets;
(S) Plans or contracts governed by Title IV of ERISA or Section 412 of
the Code;
(T) Contracts with Hitachi or Mitsubishi or the respective Affiliates
of either or otherwise entered into in connection with Seller's relationship
with such Persons;
(U) Contracts with respect to or related to Texas Instruments-Acer
Incorporated or any successor thereto;
(V) Contracts relating to subsidies received or entitlements to
subsidies in Italy or Singapore; and
(W) Any material Contract primarily related to or primarily used in
the Business not listed with respect to (A) through (V) above.
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Nothing herein shall require to be listed in Section 4.1(f) of the Seller
Disclosure Letter any Contract that has terminated by its terms before, or is
otherwise no longer in effect on, the date hereof. References to time periods
in this Section 4.1(f)(i) shall be only to such periods commencing on or after
January 1, 1997.
(ii) Except as set forth in Section 4.1(f) of the Seller
Disclosure Letter, each member of the Seller Group has in all respects
performed, or is now performing, the obligations of, and no member of the Seller
Group is in default in any respect (or would by the lapse of time or the giving
of notice or both be in default in any respect) in respect of, any Contract
listed in Section 4.1(f) of the Seller Disclosure Letter, except for such
matters as would not result in a Liability of $50,000 in any one case or
$250,000 in the aggregate, or individually or in the aggregate would have a
Material Adverse Effect. Each such Contract is in full force and effect and is
a valid and enforceable obligation against the members of the Seller Group (to
the extent they are a party thereto), and against the other party thereto in
accordance with its terms (subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium and similar Laws
affecting creditors' rights, and, with respect to the remedy of specific
performance, equitable doctrines applicable thereto). Except as set forth in
such Section 4.1(f) of the Seller Disclosure Letter, to the knowledge of Seller,
no other party to such Contracts is in default in any material respect (or would
by the lapse of time or the giving of notice or both be in default in any
material respect thereunder) or has breached in any material respect any terms
or provisions thereof. No third party has raised any material claim, dispute or
controversy with respect to any of the Contracts relating to the Business other
than has been listed in Section 4.1(f) of the Seller Disclosure Letter, nor has
any member of the Seller Group received written notice or warning of alleged
nonperformance, delay in delivery or other noncompliance by any member of the
Seller Group with respect to its obligations under any such Contracts.
(iii) Except to the extent as specifically described in Section
4.1(f) of the Seller Disclosure Letter, no member of the Seller Group is a party
to, nor is bound by any Contract or other agreement primarily used in or
primarily related to the Business and not previously listed above which either
separately or in the aggregate has, or would reasonably be expected to have in
the future, a Material Adverse Effect.
(iv) True, correct and complete copies of all of the Contracts
listed in the Seller Disclosure Letter shall be delivered to Buyer or its
counsel prior to or concurrently with delivery of the Seller Disclosure Letter
to Buyer pursuant to Section 6.10 hereof (but in no event later than thirty (30)
days after the date of this Agreement).
(g) Consents and Approvals of Governmental Agencies. Except as set
-----------------------------------------------
forth in Section 4.1(g) of the Seller Disclosure Letter, no consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Agency is required by or with respect to any member of the Seller
Group in connection with the execution, delivery and performance of this
Agreement, the Related Agreements or the Reorganization Agreements or the
consummation by each such member of the transactions contemplated hereby and
thereby, except for (i) compliance with
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the HSR Act and the European Union rules and regulations, (ii) compliance with
applicable state securities laws, (iii) such filings as may be required to be
made by Seller with the SEC and any exchange on which any of its securities are
listed and (iv) any such requirements, noncompliance with which would not (A)
result in any Liability of $25,000 in one case or $100,000 in the aggregate, (B)
individually or in the aggregate, have a Material Adverse Effect or materially
impair the ability of Buyer to carry on the Business as currently conducted or
(C) individually or in the aggregate, have a Material Adverse Effect on the
ability of any member of the Seller Group to perform its obligations under this
Agreement, the Related Agreements or the Reorganization Agreements.
(h) Other Consents. Except as set forth in Section 4.1(h) of the
--------------
Seller Disclosure Letter, no consent, waiver or approval of, or notice to, any
third party is required or necessary to be obtained by any member of the Seller
Group in connection with the execution and delivery of this Agreement, the
Related Agreements or the Reorganization Agreements, and the performance of
their obligations hereunder and thereunder, except for any such consents,
waivers, approvals or notices which if not obtained or made would not (A) result
in any Liability of $100,000 in one case or $500,000 in the aggregate, (B)
individually or in the aggregate, have a Material Adverse Effect or materially
impair the ability of Buyer to carry on the Business as currently conducted or
(C) individually or in the aggregate, have a Material Adverse Effect on the
ability of any member of the Seller Group to perform its obligations under this
Agreement, the Related Agreements or the Reorganization Agreements.
(i) Financial Statements. Section 4.1(i) of the Seller Disclosure
--------------------
Letter contains a true, correct and complete copy of the March Balance Sheet.
The March Balance Sheet fairly presents the financial condition of the Business
on a combined basis (including Seller's JV Interests as an equity investment) as
of the date thereof and was prepared in accordance with GAAP (except for the
absence of notes thereto) and in accordance with the books and records of the
relevant entities. When delivered in accordance with the terms hereof, the
audited balance sheets as at December 31, 1996 and as at December 31, 1997,
together with the related audited statements of income and cash flow for the
twelve-month periods ended December 31, 1996 and December 31, 1997 (the
"Financial Statements") will fairly present the financial condition of the
Business on a combined basis (including Seller's JV Interests as an equity
investment) as of the dates thereof, and each of the statements of operations
and cash flow will fairly present the results of operations and cash flows for
the periods therein referred to, all as prepared in accordance with GAAP
consistently applied throughout the periods involved and, in the case of the
balance sheets, consistent with the GAAP principles used to prepare the March
Balance Sheet.
(j) Absence of Undisclosed Liabilities. There are no Liabilities
----------------------------------
relating to the Business (other than Excluded Liabilities), except (i)
Liabilities that are fully accrued or reserved against in the March Balance
Sheet, (ii) Liabilities incurred since the date of the March Balance Sheet in
the ordinary course of business and consistent with past practices, (iii)
Liabilities that were not incurred in the ordinary course of business and
consistent with past practices that do not exceed $100,000 in any single case or
$500,000 in the aggregate, (iv) Liabilities disclosed in Section 4.1(j)
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of the Seller Disclosure Letter, and (v) Liabilities under Contracts disclosed
in the Seller Disclosure Letter or under Contracts not required to be disclosed
therein.
(k) Absence of Certain Changes. Except as set forth in Section 4.1(k)
--------------------------
of the Seller Disclosure Letter, since the date of the March Balance Sheet, no
member of the Seller Group, with respect to the Business, has:
(i) Suffered any change or changes which, individually or in the
aggregate, have had or may reasonably be expected to have a Material Adverse
Effect other than as a result of changes in the Memory Products industry or the
economy generally;
(ii) Except for Liabilities incurred in the ordinary course of
business and consistent with past practice, borrowed or agreed to borrow any
funds or incurred, assumed or become subject to, whether directly or by way of
guarantee or otherwise, any Liability;
(iii) To the knowledge of Seller, no member of the Seller Group
has become subject to any newly enacted or adopted Law which may reasonably be
expected to have a Material Adverse Effect;
(iv) Permitted or allowed any of its property or assets (real,
personal or mixed, tangible or intangible) to be subjected to any Liens, except
for Permitted Liens;
(v) Written up the value of any inventory, any notes or accounts
receivable or any other assets, except for write-ups in the ordinary course of
business and consistent with past practices;
(vi) Waived any claims or rights of substantial value, or sold,
transferred, or otherwise disposed of any of its properties or assets (real,
personal or mixed, tangible or intangible), except in the ordinary course of
business and consistent with past practices;
(vii) Licensed, sold, transferred, pledged, modified, disclosed,
disposed of or permitted to lapse any right to the use of any Acquired
Intellectual Property, except in the ordinary course of business and consistent
with past practices;
(viii) Granted any general increase in the compensation of
officers or employees (including any such increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment), except in the ordinary
course of business and except for any bonuses to be paid by Seller and
consistent with past practices;
(ix) Made any change in any method of accounting or accounting
practice or any change in depreciation or amortization policies or rates
theretofore adopted;
(x) Paid, lent or advanced any amount to, or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible, or
intangible) to, or entered into any
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agreement or arrangement with, any officer or director or Affiliate of any other
member of the Seller Group, except for directors' fees and employment
compensation to officers;
(xi) Sold, leased or otherwise disposed of any of its assets,
except in the ordinary course of business and consistent with past practices;
(xii) Entered into any other transaction, contract, commitment or
arrangement other than in the ordinary course of business and consistent with
past practices;
(xiii) Agreed, whether in writing or otherwise, to undertake any
Remedial Activity or to take any action described in this Section 4.1(k).
(l) Litigation. Section 4.1(l) of the Seller Disclosure Letter lists
----------
all Claims pending, or to the knowledge of Seller, threatened against any of the
Seller Group members with respect to the Business except for such Claims which
individually or in the aggregate have not had or would not reasonably be
expected to have a Material Adverse Effect. No member of the Seller Group is in
default under, or in violation of, any judgment, order, writ, injunction or
decree of any Governmental Agency relating to the Business, except for those
defaults or violations, which in the aggregate would not have, or reasonably be
expected to have, a Material Adverse Effect.
(m) Compliance with Laws; Permits.
-----------------------------
(i) Except as set forth in Section 4.1(m) of the Seller Disclosure
Letter, the Business is being conducted in compliance with all applicable Laws
and no member of the Seller Group has received any notification that any member
of the Seller Group, with respect to the Business, is in violation of any Laws,
except where any such noncompliance or violations would not (A) result in a
Liability of $100,000 in any one case or $500,000 in the aggregate, (B)
individually or in the aggregate, have a Material Adverse Effect, or (C)
individually or in the aggregate, have a Material Adverse Effect on the ability
of any member of the Seller Group to perform its obligations under this
Agreement, the Related Agreements or the Reorganization Agreements.
(ii) Section 4.1(m) of the Seller Disclosure Letter sets forth a true
and complete list of all Permits and/or Approvals required to conduct the
Business as presently conducted, other than such Permits and/or Approvals the
failure to obtain which would not (A) result in a Liability of $100,000 in any
one case or $500,000 in the aggregate, (B) individually or in the aggregate,
have a Material Adverse Effect or materially impair the ability of Buyer to
carry on the Business as currently conducted, or (C) individually or in the
aggregate, have a Material Adverse Effect on the ability of any member of the
Seller Group to perform its obligations under this Agreement, the Related
Agreements or the Reorganization Agreements. All such Permits and/or Approvals
are being complied with in all material respects and will not be terminated or
revoked as a result of the transactions contemplated by this Agreement, the
Related Agreements or the Reorganization Agreements.
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(iii) Except as set forth in Section 4.1(m) of the Seller Disclosure
Letter, there are no judgments, orders, injunctions, decrees, stipulations,
awards (whether rendered by a Governmental Agency or by arbitration) or private
settlement agreements involving any member of the Seller Group and relating to
the Business, other than any of the foregoing which have not and will not (A)
result in a Liability to the Business of $50,000 in any one case or $100,000 in
the aggregate, (B) individually or in the aggregate, have a Material Adverse
Effect or materially impair the ability of Buyer to carry on the Business as
currently conducted, or (C) individually or in the aggregate, have a Material
Adverse Effect on the ability of any member of the Seller Group to perform its
obligations under this Agreement, the Related Agreements or the Reorganization
Agreements. All of the foregoing which are final and nonappealable are being
complied with in all material respects.
(iv) No member of the Seller Group or any director, officer, employee
or agent of any of them acting on their behalf, or any other person acting on
their behalf has, directly or indirectly, within the past three (3) years given
or agreed to give any gift or similar benefit to any customer, supplier,
competitor or governmental employee or official which would subject the Business
to any Liability or Loss under any Law in any civil, criminal or governmental
litigation.
(n) Real Property and Facilities.
----------------------------
(i) The Acquired Facilities are all of the real property and
improvements required for the Business as presently conducted and no facilities
have been used for the conduct of the Pre-Closing Seller Operations other than
the Acquired Facilities and the Former Facilities of the Seller Group.
(ii) The leases for the Leased Facilities are or, as of the Closing,
will be in full force and effect for the benefit of the member of the Buyer
Operating Group (indicated in Section 4.1(n) of the Seller Disclosure Letter),
as lessee and there are no material defaults attributable to the lessee or to
the landlord thereunder.
(iii) To the knowledge of Seller, no fact, circumstance or event
which, with the passage of time, the giving of notice, or both, would
constitute, as of the Closing, any material default under any lease for the
Leased Facilities. There are no existing subleases of any Leased Facility, other
than as specified in Section 4.1(n) of the Seller Disclosure Letter.
(iv) Each member of the Seller Group is the sole legal and equitable
owner of the Owned Facilities indicated as owned by such member in Section
4.1(n) of the Seller Disclosure Letter and, as of the Closing, will be and such
member has the full right to convey fee simple absolute title to the same.
(v) No member of the Seller Group has granted any option or right of
first refusal or first opportunity to any party to acquire, lease or occupy an
Acquired Facility, nor any portion thereof or interest therein.
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(vi) Except for Permitted Liens, the Acquired Facilities and the
other Acquired Assets are not subject to any Liens (other than a Lien
encumbering only the right, title and interest of any Person other than a Seller
Group member in and to a Leased Facility).
(vii) All water, sewer, plumbing, gas, electric, telephone,
communications, heating, ventilating, air condition, security, fire safety,
drainage, waste treatment, water treatment, and other utility facilities
required by applicable Law, any Contract or otherwise for the conduct in all
material respects of the Business as presently conducted ("Required Utilities")
have been, and at the Closing Date, will be, in all material respects, (A)
legally installed to and available for use in the Acquired Facilities, and (B)
connected to the Acquired Facilities and other Acquired Assets in accordance
with all applicable Laws, Contracts, Permits and/or Approvals.
(viii) The tangible Acquired Assets are now, and at the time of
Closing will be, free of any material physical or mechanical defects, and will
be in good operating condition and repair in all material respects, in
compliance in all material respects with the Laws, Contracts, Environmental
Requirements, Permits and/or Approvals binding thereon, reasonably maintained
consistent in all material respects with standards generally followed by similar
businesses and building owners and users, and adequate for the purposes for
which they are currently being used for the Business.
(ix) No condemnation, zoning, land-use or Tax imposition, or other
Proceeding has been instituted with respect to any tangible Acquired Asset or
tangible Italian Newco Assets or Singapore Newco Assets and to the knowledge of
Seller, no such Proceeding is planned or threatened which could in any of the
foregoing cases: (A) result in a Loss, Liability, Claim or Proceeding in excess
of $50,000 in any one case or $250,000 in the aggregate, (B) individually or in
the aggregate, have a Material Adverse Effect or materially impair the ability
of Buyer to carry on the Business as currently conducted, or (C) individually or
in the aggregate, have a Material Adverse Effect on the ability of any member of
the Seller Group to perform its obligations under this Agreement, the Related
Agreements or the Reorganization Agreements.
(x) At the time of Closing, there will be no obligations to any
contractors, subcontractors or material suppliers with respect to any
alterations or improvements of the Acquired Facilities which have not been fully
paid and performed, and the Seller Group shall cause to be discharged all
mechanics' and materialmen's Liens arising from any labor or materials furnished
for alterations or improvements of the Acquired Facilities prior to the time of
Closing.
(o) Environmental Matters.
---------------------
(i) Except as would not reasonably be expected (A) to result in
aggregate Claims or Losses in excess of $250,000 or (B) to have a Material
Adverse Effect: (1) no Contamination is or has been present on, in, under or
about any Acquired Facility, (2) to Seller's knowledge, no Contamination is
present on, in, or about any Disposal Facility of the Seller Group
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(other than Contamination resulting from Hazardous Material Activities of Buyer
or its Subsidiaries when they were Buyer's Subsidiaries at such Disposal
Facility), (3) no Contamination described in clauses (1) or (2) hereof has
migrated, or is reasonably likely to migrate to or from such Acquired Facility
or, to Seller's knowledge, such Disposal Facility, (4) on or before the last
date that the Seller Group member owned, leased or occupied a Former Facility or
that the Former Facility was used for Pre-Closing Seller Operations, no
Contamination (other than Contamination resulting from Hazardous Material
Activities of Buyer or its Subsidiaries when they were Buyer's Subsidiaries at
such Former Facility) was present on, in, under or about said Former Facility,
and (5) no Contamination described in clause (4) hereof has migrated, or is
reasonably likely to migrate, to or from any such Former Facility.
(ii) No underground storage tank, surface impoundment, landfill or
waste disposal site is present on the Acquired Facilities, except to the extent
such underground storage tank, surface impoundment, landfill or waste disposal
site does not (A) result in an aggregate Claims or Losses in excess of $250,000
or (B) have a Material Adverse Effect or materially impair the ability of Buyer
to carry on the Business.
(iii) All Hazardous Material Activities associated with the Pre-
Closing Seller Operations or conducted at the Acquired Facilities prior to the
Closing Date have complied in all material respects with applicable
Environmental Requirements applicable thereto at the time the Hazardous Material
Activity was conducted (except for noncompliance which is remedied in all
material respects prior to the Closing Date or which, in the aggregate cannot
reasonably be expected (A) to result in an aggregate Claims or Losses in excess
of $250,000 or (B) to have a Material Adverse Effect or materially impair the
ability of the Buyer to carry on the Business) and such Hazardous Material
Activities have not resulted in the exposure of any employee of the Seller Group
or of other Person to a Hazardous Material in a manner which has or will cause
an adverse health effect to said employee or Person, except to the extent that
such exposures do not (A) result in aggregate Claims or Losses in excess of
$250,000 or (B) have a Material Adverse Effect or materially impair the ability
of Buyer to carry on the Business.
(iv) To the knowledge of Seller, the Permits and/or Approvals
described in Section 4.1(m) of the Seller Disclosure Letter are all of the
Permits and/or Approvals required for the conduct in all material respects of
the Hazardous Material Activities associated with the Business as presently
conducted. All such Permits and/or Approvals are, or at the Closing will be held
by the Buyer Operating Group, in full force and effect, and the Seller Group has
complied with all covenants and conditions thereof in all material respects and
has made all disclosures and reports required pursuant to such Permits and/or
Approvals or other applicable Environmental Requirements, except for
noncompliance that has been fully remedied or that would not have a Material
Adverse Effect or materially impair the ability of the Buyer to carry on the
Business. To the knowledge of Seller, no fact or circumstance exists which could
reasonably be expected to cause any such Permit and/or Approval to be revoked or
rendered nonrenewable by Buyer or would require, as a condition to the
continuation or renewal of such Permit and/or Approval, capital
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improvements or repairs at the Acquired Facilities costing in the aggregate in
excess of $100,000, over the amount, if any, of the reserves shown on the
Closing Balance Sheet.
(v) The Seller Group members, the Acquired Assets, and the Business
are not, and as of the Closing the Buyer Operating Group members will not be,
subject to any voluntary or involuntary Claims or Losses or any pending or, to
the knowledge of Seller, threatened, Liabilities respecting (A) any Retained
Environmental Liability, (B) any Remedial Activity, (C) the conduct of any
Hazardous Material Activities associated with the Pre-Closing Seller Operations,
or (D) any Environmental Requirement applicable to the Seller Group members, the
Acquired Assets, or the Business (except to the extent that any such
Environmental Requirement, obligations or Claim does not (x) result in aggregate
Liabilities in excess of $250,000 or (y) have a Material Adverse Effect or
materially impair the ability of the Buyer to carry on the Business; and to the
knowledge of Seller, there are no other facts, circumstances, events or
incidents involving the Hazardous Material Activities associated with the Pre-
Closing Seller Operations which could give rise to any such Liabilities.
(vi) To the knowledge of Seller, no asbestos-containing materials
are present on the Acquired Facilities, other than the asbestos-containing
material which is on or part of the Acquired Facilities and is not friable,
complies with applicable Environmental Requirements applicable thereto as of the
date hereof and will comply with the Environmental Requirements applicable
thereto as of the Closing Date and is in good repair according to the current
standards and practices governing such material except to the extent the same
will not result in a Material Adverse Effect.
(vii) To the knowledge of Seller, other than Hazardous Materials
which are reasonably necessary for the conduct of the Business and are properly
stored in the Acquired Facilities in accordance with applicable Environmental
Requirements applicable thereto as of the date hereof or will be stored in the
Acquired Facilities on the Closing Date in accordance with the Environmental
Requirements applicable thereto as of the Closing Date, no Hazardous Material
is, or at the Closing Date will be, stored or kept at any Acquired Facility in
connection with the Business except to the extent the same will not result in a
Material Adverse Effect.
(viii) Seller will have made, and shall have caused the Seller Group
to have made, available to Buyer for review within ten (10) days of the date of
this Agreement, all material records, environmental audits, assessments and
reports, correspondence with Governmental Agencies and other documents
pertaining to the Hazardous Material Activities associated with the Business as
currently conducted, any Retained Environmental Liabilities, Contamination at
any Acquired Facility, Disposal Facility or, to the extent associated with the
Pre-Closing Seller Operations, any Former Facility, or Disposal Facility, which
were conducted at the request of, or which are otherwise available to, any
Seller Group member.
(p) Intellectual Property.
---------------------
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<PAGE>
(i) Section 4.1(p) of the Seller Disclosure Letter sets forth,
respectively for each member of the Seller Group, all of such member's
Registered Intellectual Property constituting Acquired Intellectual Property,
and shall disclose any proceedings or actions known to any of the members of the
Seller Group before any Governmental Authority (including the PTO or equivalent
authority anywhere in the world) related to such Registered Intellectual
Property. To the knowledge of each member of the Seller Group, such item of the
Registered Intellectual Property is valid, all necessary registration,
maintenance and renewal fees in connection with such Registered Intellectual
Property have been paid, and all necessary documents and certificates in
connection with such Registered Intellectual Property have been filed with the
relevant Copyright, Trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property.
(ii) Except as set forth in Section 4.1(p) of the Seller Disclosure
Letter, the members of the Seller Group individually or collectively are the
exclusive owners of all the Acquired Intellectual Property.
(iii) Except as set forth in Section 4.1(p) of the Seller Disclosure
Letter: (A) each item of Acquired Intellectual Property, including all
Registered Intellectual Property which is listed in Section 4.1(p) of the Seller
Disclosure Letter, is free and clear of any Liens (other than Permitted Liens);
and (B) there are no agreements between any Person and any member of the Seller
Group encumbering or restricting the transfer or sale of the Acquired
Intellectual Property to Buyer in the manner contemplated by this Agreement.
(iv) Except as set forth in Section 4.1(p) of the Seller Disclosure
Letter, no Acquired Intellectual Property is subject to any Proceeding or other
outstanding decree, order, judgment, agreement or stipulation that restricts in
any manner the transfer thereof by any member of the Seller Group, at the
Closing, or that affects the validity, use or enforceability of the Acquired
Intellectual Property.
(v) Except as set forth in Section 4.1(p) of the Seller Disclosure
Letter, none of the members of the Seller Group has transferred ownership of, or
granted any license or right to use, or authorized the retention of any rights
to use, any material Intellectual Property that is Acquired Intellectual
Property, to any other Person and no member of the Seller Group has transferred
or licensed any of its Intellectual Property primarily used in the Business
prior to the Closing in contemplation of this transaction.
(vi) Except as set forth in Section 4.1(p) of the Seller Disclosure
Letter, the use and exploitation of the Acquired Assets, including the operation
of the Business, by Buyer following the Closing will not infringe any Patent or
other Intellectual Property of any member of the Seller Group or any Affiliate
of such member.
(vii) Except as set forth in Section 4.1(p) of the Seller Disclosure
Letter: (A) to the knowledge of each member of the Seller Group, the operation
of the Business does not
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(i) infringe or misappropriate the Intellectual Property (excluding Patents) of
any Person, (ii) violate the rights of any Person, or (iii) constitute unfair
competition or trade practices under the laws of any jurisdiction; and (B) none
of the members of the Seller Group has received from any Person written
assertion or notice claiming that the operation of the Business or the use or
sale of any Acquired Assets, infringes or misappropriates the Intellectual
Property of any Person or constitutes unfair competition or trade practices
under the Laws of any jurisdiction (and no member of the Seller Group is aware
of any basis for any such assertion to be made).
(viii) Except as set forth in Section 4.1(p) of the Seller Disclosure
Letter, there are no Contracts between any member of the Seller Group and any
other Person with respect to Intellectual Property related to the Business under
which there is, to the knowledge of any member of the Seller Group, any dispute
or any threatened dispute regarding the scope of such agreement, or performance
under such agreement, including with respect to any payments to be made or
received by any member of the Seller Group thereunder.
(ix) Section 4.1(p) of the Seller Disclosure Letter includes all
material Contracts, licenses and agreements related to the Business, to which
any member of the Seller Group is a party with respect to any Intellectual
Property of any Person other than the Seller Group. Except as disclosed on
Section 4.1(p) of the Seller Disclosure Letter, no Person other than the Seller
Group has ownership rights to improvements made by any member of the Seller
Group in Intellectual Property which has been licensed to such member.
(x) Except as disclosed in Section 4.1(p) of the Seller Disclosure
Letter, to the knowledge of each member of the Seller Group, no Person is
infringing or misappropriating any of the Acquired Intellectual Property. Each
member of the Seller Group has taken such reasonable steps as are required to
protect such member's rights in confidential information and Trade Secrets
constituting the Acquired Intellectual Property.
(xi) Section 4.1(p) of the Seller Disclosure Letter sets forth a
true and correct description of Seller's Year 2000 plan ("Sellers Year 2000
Plan"). Seller and each member of the Seller Group has, as of the date hereof,
taken all reasonable steps, and made every reasonable effort, to substantially
comply with, implement, carry out and effectuate all of the requirements, steps,
measures and procedures, and meet all the guidelines and deadlines, as set forth
in such plan. Seller has no knowledge of any event, occurrence, condition or
reason that would prevent, or interfere with, the implementation of the plan
substantially in accordance with the guidelines and deadlines set forth in such
plan. Within five (5) Business Days of the date hereof, Seller shall deliver to
Buyer a true, correct and complete copy of Seller's Year 2000 Plan.
(xii) Section 4.1(p) of the Seller Disclosure Letter lists all
actions that must be taken within sixty (60) days of the Closing Date, including
the payment of any registration, maintenance or renewal fees or the filing of
any documents, applications or certificates for the purposes of maintaining,
perfecting or preserving or renewing any of the Acquired Intellectual Property.
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(xiii) Section 4.1(p) of the Seller Disclosure Letter lists all
Trademarks and service marks, domestic or foreign, whether registered or
unregistered, used or intended to be used by any member of the Seller Group in
connection with the Business, excepting those registrations or applications for
the marks or trade names that include "TI" and/or "Texas Instruments."
(xiv) There are no marks or tradenames used in the Business for which
registration has not been sought.
(xv) The rights granted by Seller to Buyer with respect to the Gore
Software pursuant to Section 6.16 hereof constitute all of the rights in the
Gore Software Seller is permitted to grant and Seller is not permitted to
license the source code for the Gore Software to third parties.
(q) Employment Matters.
------------------
(i) The Seller Group has provided Buyer with true, correct and
complete particulars of the material terms of engagement of all Domestic
Employees and Foreign Employees.
(ii) Except as set forth in Section 4.1(q) of the Seller Disclosure
Letter, there is no Contract of employment between any member of the Seller
Group and any foreign employee or expatriate employee which is not terminable or
is only terminable by payment of compensation exceeding $25,000 in any one case
and $100,000 in the aggregate.
(iii) Except as set forth in Section 4.1(q) of the Seller Disclosure
Letter, no member of the Seller Group nor any of their Affiliates is a party to
any agreement or arrangement with or commitment to, or has received within three
(3) years prior to the date hereof any request for recognition or bargaining
rights from, any employee or trade union or employee association with respect to
any of their employees.
(iv) There is no dispute between any member of the Seller Group or
any of their Affiliates and a number or class of any of the Seller Group member
employees in any case which would have a Material Adverse Effect or materially
impair the ability of the Buyer to carry on the Business, and are no payments of
compensation due but unpaid by any member of the Seller Group other than accrued
in the ordinary course of business as reflected on the Closing Balance Sheet.
(v) All Foreign Benefit Plans are listed by country in Section
4.1(q) of the Seller Disclosure Letter. Each Foreign Benefit Plan has been
established and maintained in substantial compliance with its terms and with the
requirements of the Laws (including any special provisions related to
qualification if the Foreign Benefit Plan was intended to be so qualified) of
any applicable jurisdiction except as would not result in a Material Adverse
Effect or materially impair the ability of the Buyer to carry on the Business as
currently conducted. Except as disclosed in Section 4.1(q) of the Seller
Disclosure Letter, all amounts set aside (whether or not in trust or a
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similar instrument), reserved, or accrued with respect to each Foreign Benefit
Plan equals or exceeds the present value of all accrued benefits (vested and
nonvested, including special early retirement, post-shutdown or plan termination
benefits as if they were accrued, and death benefits unless otherwise covered by
insurance both before and after the expected retirement ages of the
participants), determined using actuarial assumptions most recently used for
purposes of funding or accruing Liabilities in respect of such plans (adjusted
to take into account the contingent events referred to in the parenthetical
above), or if no such assumptions exist, using the assumptions most recently
used for funding the most similar plan (adjusted as described above), of
participants and beneficiaries in such plans as of the Closing Date.
(vi) No member of the Seller Group nor any ERISA Affiliate of any
member thereof has or will have on or before the Closing Date (A) engaged in, or
is a successor or parent corporation to an entity that has engaged in, a
transaction described in Section 4069 of ERISA, or (B) incurred, or reasonably
expects to incur prior to the Closing Date, any material Liability under, or has
any Liens attached to the Acquired Assets by reason of liability under, Title IV
of ERISA arising in connection with the termination or pending termination of,
or a complete or partial withdrawal from, any plan covered or previously covered
by Title IV of ERISA that could become a Liability of Buyer or any of its ERISA
Affiliates or encumber the Acquired Assets after the Closing Date.
(vii) Except as set forth in Section 4.1(q) of the Seller Disclosure
Letter, no member of the Seller Group nor any of their Affiliates has any
current or projected Liability in respect of post-employment or post-retirement
health, medical, and life insurance or other employee welfare benefits.
(viii) All contributions, payments or Liabilities accrued under each
Foreign Benefit Plan, determined in accordance with prior funding and accrual
practices, as adjusted to include proportional accruals for the period ending on
the Closing Date, will be discharged and paid or remitted or accrued, in any
case consistent with prior practice, (A) on or prior to the Closing Date, or (B)
in the case of a funded Foreign Benefit Plan in respect of which payments are
required to be made to an insurance company, trust or support fund or other
independent entity, within such time as the Seller Group normally makes such
payments but in any event within thirty (30) days after the Closing. Except as
disclosed in writing to Buyer prior to the date hereof, there has been no
amendment by the Seller Group, or any Affiliate thereof, to any written
interpretation of or announcement (whether or not written) by the Seller Group
or any of its Affiliates relating to, or change in employee participation or
coverage under any Foreign Benefit Plan that would increase materially the
expense of maintaining such Foreign Benefit Plan above the level of the expense
incurred in respect thereof for the fiscal year ended prior to the date hereof.
(r) Customers. Section 4.1(r) of the Seller Disclosure Letter sets forth
---------
a true and complete list of the largest twenty (20) customers with respect to
the Business for each of the fiscal year ended December 31, 1997 and the three-
month period ended March 31, 1998 determined on the basis of revenues recorded
during each such periods. Except as set forth in Section 4.1(r) of the Seller
Disclosure Letter, to the knowledge of each member of the Seller Group, none of
such
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customers has terminated or indicated its intent to terminate or materially
reduce the amount of its business with respect to the Business.
(s) Orders, Commitments and Returns. All accepted and unfulfilled
-------------------------------
orders for the sale of products entered into for the account of the Business and
all outstanding Contracts or commitments for the purchase of supplies and
materials were made in the ordinary course of business. The Closing Balance
Sheet will include provisions for any and all product returns, volume discounts,
repricings and rebates based on volume purchases required under GAAP
consistently applied with the March Balance Sheet.
(t) Defects in Products; Warranties. Except as set forth in Section
-------------------------------
4.1(t) of the Seller Disclosure Letter, there are no defects in the design or
manufacture of the products heretofore or currently being distributed or sold in
the conduct of the Business, which would have a material adverse effect on the
performance and quality of such products. There are no express warranties, or
implied warranties arising from course of conduct between parties, outstanding
with respect to the products of the Business except as set forth in Section
4.1(t) of the Seller Disclosure Letter. The Closing Balance Sheet shall include
reserves in the aggregate for any and all returns or allowances for defective
products and warranty claims as required under GAAP consistently applied with
the March Balance Sheet.
(u) Purchase for Investment. Seller is purchasing the shares of Buyer
-----------------------
Common Stock, the Subordinated Notes and the Convertible Notes pursuant to the
terms of this Agreement solely for its own account for the purpose of investment
and not with a view to, or for sale in connection with, any distribution
thereof.
IV.2 Representations and Warranties Relating to the Joint Ventures.
-------------------------------------------------------------
(a) Organization and Qualification. Each Joint Venture is an entity
------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, operate and lease the properties and assets it now owns,
operates and leases and to conduct its business as it is now being conducted.
True, correct and complete copies of the organizational documents of each Joint
Venture, each with all amendments thereto, have been delivered to Buyer. Each
Joint Venture is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of its assets or the nature
of its activities makes such qualification or license necessary, except where
the failure to be so qualified or licensed would not, individually or in the
aggregate, have a JV Material Adverse Effect.
(b) Authority. Each Joint Venture shall have all requisite power and
---------
authority to enter into, execute and deliver such agreements which are required
to effect valid transfers of Seller's interests in the Joint Venture to the
Buyer at the Closing (the "JV Transfer Agreements") as contemplated by this
Agreement and the Related Agreements, to perform its obligations thereunder, and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of such agreements by each Joint Venture, the performance by each
Joint Venture of its obligations
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under such agreements and the consummation of the transactions contemplated
thereby shall have been duly and validly authorized by all necessary corporate
action on the part of each Joint Venture and (assuming due execution and
delivery by the Buyer of such agreements as required) such agreements, when
executed and delivered, will constitute legal, valid and binding obligations of
each Joint Venture enforceable against such Joint Venture in accordance with
their terms, subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium and similar Laws affecting
creditors' rights, and, with respect to the remedy of specific performance,
equitable doctrines applicable thereto.
(c) No Violations. The execution and delivery of this Agreement and
-------------
the Related Agreements, the performance by each Joint Venture of its obligations
under such agreements and the consummation of the transactions contemplated
thereby, will not conflict with, contravene, result in a violation or breach of
or default under (with or without the giving of notice or the lapse of time or
both), create in any other Person a right of claim of termination, amendment, or
require modification, acceleration or cancellation of, or result in the creation
of any Lien (or any obligation to create any Lien) upon any of the properties or
assets of the Joint Ventures under (i) any provision of any of the
organizational documents of each Joint Venture, (ii) any Law applicable to the
Joint Ventures or any of their respective properties or assets assuming the
consents, approvals, authorizations or permits and filings or notifications set
forth in Section 4.2(g) of the Seller Disclosure Letter are duly and timely
obtained or made, (iii) except as to which requisite waivers or consents have
been obtained and except for the consents and approvals required under the
agreements and instruments listed in Section 4.2(f) of the Seller Disclosure
Letter, any Contract, to which a Joint Venture is a party or by which any of
their respective properties or assets may be bound; other than any of the
foregoing under clauses (ii) and (iii) which would not result in a JV Material
Adverse Effect. Except as set forth in Section 4.2(c) of the Seller Disclosure
Letter, neither the execution and delivery of any JV Transfer Agreement by the
Joint Ventures, nor the consummation of the transactions contemplated hereby or
thereby, will result in the loss to Buyer of any material benefit enjoyed by any
member of the Seller Group or the Joint Ventures in connection with the Business
or the Acquired Assets.
(d) Capitalization. Section 4.2(d) of the Seller Disclosure Letter
--------------
contains a true, correct and complete description of the equity or other
ownership interests of each Joint Venture. All of such equity or other ownership
interests are owned beneficially and of record by such Persons set forth in
Section 4.1(d) of the Seller Disclosure Letter. Section 4.2(d) of the Seller
Disclosure Letter also lists for each Joint Venture all subscriptions, options,
warrants, conversion or other rights, agreements, commitments, arrangements or
understandings of any kind, outstanding obligating either Joint Venture,
contingently or otherwise, to issue or sell, or cause to be issued or sold, any
equity or other ownership interests. Immediately prior to the Closing, except
as set forth in Section 4.2(d) of the Seller Disclosure Letter, (i) there will
be no preemptive or similar rights with respect to the JV Interests, (ii) there
will be no subscriptions, options, warrants, conversion or other rights,
agreements, commitments, arrangements or understandings of any kind obligating
either Joint Venture, contingently or otherwise, to issue or sell, or cause to
be issued or sold, any equity or other ownership interest in either Joint
Venture, and (iii) there will be no outstanding contractual or other
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rights or obligations to or of either Joint Venture to repurchase, redeem or
otherwise acquire any equity or other ownership interest in either Joint
Venture. Section 4.2(d) of the Seller Disclosure Letter contains a true, correct
and complete description of all capital contributions, loans and other
investments, including indirect investments such as guarantees, letters of
credit and other credit support arrangements, for each of the equity holders of
each of the Joint Ventures for the past two years.
(e) Sufficiency of Assets; Title of Transfer.
----------------------------------------
(i) The assets currently held by each Joint Venture constitute, and
the assets of each Joint Venture as of the Closing Date will constitute, all of
the properties and assets (real, personal and mixed, tangible and intangible)
used in or necessary to conduct the business of each Joint Venture as currently
conducted, except as otherwise described in Section 4.2(e) of the Seller
Disclosure Letter.
(ii) At the time of the Closing, Seller will have the right, power
and authority to sell, transfer and assign the JV Interests pursuant to this
Agreement. The transfer of the JV Interests to the Buyer against payment
therefore as contemplated by Section 3.2 will transfer to Buyer good and valid
title to, and beneficial ownership of, the JV Interests, free and clear of all
Liens and, upon execution and delivery of the JV Amendments as contemplated by
Section 9.1(c), Buyer shall be entitled to the rights under each of the JV
Agreements, after giving effect to the JV Amendments, and such agreements as so
amended shall be valid, binding and enforceable in accordance with their terms
subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and similar Laws affecting creditors'
rights and, with respect to the remedy of specific performance, equitable
doctrines applicable thereto. The sale of the JV Interests will not give rise to
any preemptive rights or rights of first refusal and will not violate any Laws.
(f) Contracts. Section 4.2(f) of the Seller Disclosure Letter sets forth
---------
a true, correct and complete list of the following Contracts of each Joint
Venture, other than such Contracts disclosed under clause (F) of Section
4.1(f)(i) (including with respect to each such Contract, the names of the
parties, the date of the Contract and all amendments, supplements and
modifications thereto):
(i) Agreements or commitments for capital expenditures or the
acquisition by lease or purchase of fixed assets for payment in excess of $1
million in any one case.
(ii) (A) Agreements for the purchase, sale, lease or other transfer
of any products, materials, supplies or services involving payment of in excess
of $1 million, and (B) supply and/or sourcing contracts, for payments (in the
case of (A) or (B)) in any one case in excess of $1 million.
(iii) Joint venture or partnership agreements with any other entity.
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(iv) Any agreement between either Joint Venture and its equity
owners or their Affiliates relating to such Joint Venture.
(v) Non-competition or similar agreements which prevent either
Joint Venture from competing with a Person.
(vi) Contracts relating to any material debt, letter of credit, bank
financing or similar arrangements (including guarantees).
(vii) Volume purchase and master agreements which require payment in
excess of $1 million in any one case.
(viii) Agreements primarily for indemnification obligations with
respect to the sale of products of either Joint Venture other than in the
ordinary course of business.
(ix) Any other Contract to which either Joint Venture is a party
which is material to the financial condition, operations (but not including
results of operations), or the ability to manufacture and supply Memory Products
of either KTI or TECH on a standalone basis, or both.
(x) Leases, subleases, mortgages or other Liens affecting the Joint
Venture Facilities or its assets having an unpaid rental obligation exceeding
$500,000 individually or $1,000,000 in the aggregate.
All such Contracts are in full force and effect, have not been amended or
modified (except as specified in Section 4.2(f) of the Seller Disclosure Letter)
and each Joint Venture has performed all the obligations imposed upon such Joint
Venture under such Contracts and is not in default or breach of any term
thereunder other than such defaults or breaches which in the aggregate would not
reasonably be expected to have a JV Material Adverse Effect. No termination
rights in respect of any of such Contracts have been exercised by either Joint
Venture or other parties thereto. To the knowledge of Seller, none of the other
parties to any of such Contracts is in default or breach of any terms
thereunder, nor is Seller aware of any event which, with the passage of time,
the giving of notice or both, would constitute a default or breach of any term
of any such Contract by any such other party, other than such defaults or
breaches which, in the aggregate, would not result in a JV Material Adverse
Effect.
(g) Consents and Approvals. Except as set forth in Section 4.2(g) of
----------------------
the Seller Disclosure Letter, no consent, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Agency is required
by or with respect to any member of the Seller Group or either Joint Venture in
connection with the execution and delivery of the JV Amendments, except for (i)
compliance with the HSR Act and similar laws of foreign jurisdictions, (ii) such
filings as may be required to be made by Seller with the SEC and any exchange on
which any of its securities are listed and (iii) any such requirements
noncompliance with which would not result in
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a JV Material Adverse Effect. Except as set forth in Section 4.2(g) of the
Seller Disclosure Letter, no consent, waiver or approval of, or notice to, any
third party is required or necessary to be obtained by any member of the Seller
Group or either Joint Venture in connection with the execution and delivery of
the JV Amendments, except for any such consents, waivers, approvals or notices
which if not obtained or made would not reasonably be expected to result in a JV
Material Adverse Effect.
(h) Financial Statements. Section 4.2(h) of the Seller Disclosure
--------------------
Letter contains true, correct and complete copies of (i) with respect to TECH,
the audited balance sheet as of December 31, 1997 and the related audited
statements of income and cash flows for the twelve-month periods ended December
31, 1996 and December 31, 1997, all examined and accompanied by the unqualified
report of TECH's auditors and (ii) with respect to KTI, the audited balance
sheet as of March 31, 1998 and the related audited statements of income and cash
flows for the twelve-month periods ended March 31, 1997 and March 31, 1998, all
audited in accordance with local statutory requirements and accompanied by the
unqualified report of KTI's auditors (the "JV Audited Financial Statements") and
(B) the unaudited balance sheet as of March 31, 1998 and the related unaudited
statements of income and cash flow for the three-month period then ended for
TECH (the "JV Interim Financial Statements" and together with the JV Audited
Financial Statements, the "JV Financial Statements"). To Seller's knowledge,
all of the JV Financial Statements are in accordance with the books and records
of the relevant entities. Each of the balance sheets included in the JV
Financial Statements (including any related notes) fairly presents the financial
condition of TECH and KTI, respectively, as of the respective dates thereof, and
each of the statements of operations and cash flow (including related notes)
fairly presents the results of operations and cash flows for the periods therein
referred to in accordance with local statutory requirements.
(i) Absence of Undisclosed Liabilities. Except as set forth in
----------------------------------
Section 4.2(i) of the Seller Disclosure Letter, there are no Liabilities
relating to either Joint Venture not included in the JV Interim Financial
Statements except such Liabilities which individually or in the aggregate would
not reasonably be expected to have a JV Material Adverse Effect.
(j) Absence of Certain Changes. Except as set forth in Section 4.2(j)
--------------------------
of the Seller Disclosure Letter, since March 31, 1998, neither Joint Venture has
experienced any changes which have resulted or could reasonably be expected to
result in a JV Material Adverse Effect.
(k) Litigation. Section 4.2(k) of the Seller Disclosure Letter lists
----------
all Claims pending or, to the knowledge of the Seller Group, threatened against
either Joint Venture with respect to its business, except for such Claims which
individually or in the aggregate have not had or could not reasonably be
expected to have a JV Material Adverse Effect. Neither Joint Venture is in
default under, or in violation of, any judgment, order, writ, injunction or
decree of any Governmental Agency relating thereto, except for those defaults or
violations, which in the aggregate would not have, or reasonably be expected to
have, a JV Material Adverse Effect.
(l) Compliance with Laws; Permits.
-----------------------------
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(i) Except as set forth in Section 4.2(l) of the Seller Disclosure
Letter, the business of each Joint Venture is being conducted in compliance with
all applicable Laws and no member of the Seller Group has received any
notification that either Joint Venture is in violation of any Laws, except where
any such noncompliance or violations would in the aggregate not reasonably be
expected to have a JV Material Adverse Effect.
(ii) Each Joint Venture currently has, and at the Closing will have,
all Permits and/or Approvals (the "JV Permits and Approvals") required to
conduct the business of each Joint Venture as presently conducted, other than
such JV Permits and Approvals the failure to obtain which would not in the
aggregate reasonably be expected to result in a JV Material Adverse Effect. All
JV Permits and Approvals are being complied with in all material respects and
will not be terminated or revoked as a result of the transactions contemplated
by this Agreement.
(iii) Except as set forth in Section 4.2(l) of the Seller Disclosure
Letter, there are no judgments, orders, injunctions, decrees, stipulations,
awards (whether rendered by a Governmental Agency or by arbitration) or private
settlement agreements involving either Joint Venture, other than any of the
foregoing which have not and would not in the aggregate result in a JV Material
Adverse Effect. All of the foregoing which are final and nonappealable are being
complied with in all material respects.
(m) Real Property and Facilities.
----------------------------
(i) No real property is or has been owned, leased or used by the
Joint Ventures in the course of their Pre-Closing Seller Operations, other than
the Joint Venture Facilities and the Former Facilities of the Joint Ventures.
(ii) Except as set forth in Section 4.2(m) of the Seller Disclosure
Letter, the Joint Ventures hold the good and fee simple title to, or a valid
leasehold interest in, the Joint Venture Facilities and the other Joint Venture
Assets, free of any Liens, other than the Permitted Liens.
(iii) The Joint Venture Assets are now, and will be at the time of
the Closing, free of physical or mechanical defects, in good operating condition
and repair (ordinary wear and tear accepted), structurally sound, in compliance
with applicable Laws, contractual obligations, Environmental Requirements, and
Permits and/or Approvals applicable thereto, have been reasonably maintained
consistent with standards generally followed by similar business and building
owners and users, and are adequate for the purposes for which they are being
used by the Joint Ventures, except for any of the foregoing that is not
reasonably likely to have a JV Material Adverse Effect.
(iv) No condemnation, zoning, land use or Tax imposition, or other
Proceeding has been instituted with respect to any Joint Venture Assets which
could have a JV
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Material Adverse Effect and, to the knowledge of Seller, no such Proceeding is
planned or threatened.
(n) Environmental Matters.
---------------------
(i) Except as would not reasonably be expected to result, in the
aggregate, in a JV Material Adverse Effect, (1) no Contamination is present or
has been present at, in, on or under any of the Joint Venture Facilities, (2) to
Seller's knowledge, no Contamination is present on, in, or about any Disposal
Facility utilized by the Joint Ventures (other than Contamination resulting from
Hazardous Material Activities of Buyer or its Subsidiaries when they were
Buyer's Subsidiaries at such Disposal Facility), (3) no Contamination described
in clauses (1) or (2) has migrated, or is reasonably likely to, migrate to or
from such Joint Venture Facility or, to Seller's knowledge, such Disposal
Facility (4) on or before the last date that a Joint Venture owned, leased or
occupied a Former Facility or that the Former Facility was used for any Joint
Venture operations, no Contamination (other than Contamination resulting from
Hazardous Material Activities of Buyer or its Subsidiaries when they were
Buyer's Subsidiaries at such Former Facility) was present on, in, under or about
said Former Facility, and (5) no Contamination described in clause (4) hereof
has migrated, or is reasonably likely to migrate, to or from any such Former
Facility.
(ii) All Hazardous Material Activities conducted by the Joint
Ventures prior to the Closing Date have complied in all material respects with
the Environmental Requirements, applicable to such activities at the time they
were conducted, and such Hazardous Material Activities have not resulted in the
exposure of any employee of either of the Joint Ventures or other Person to a
Hazardous Material in a manner which has or will cause an adverse health effect
to said employee or Person, except to the extent that any noncompliance or
exposure resulting from the Hazardous Material Activities of each Joint Venture
cannot reasonably be expected to result, in the aggregate, in a JV Material
Adverse Effect.
(iii) All Permits and/or Approvals required for the conduct of the
Hazardous Material Activities associated with the Business performed by each
Joint Venture prior to the Closing are held by the Joint Ventures and are in
full force and effect. The Joint Ventures have complied with all covenants and
conditions thereof in all material respects, except as any noncompliance or
failure to obtain such Permits and/or Approvals would not, in the aggregate,
result in a JV Material Adverse Effect. With respect to such Permits and/or
Approvals, no fact or circumstance exists which could cause any such Permit
and/or Approval to be revoked or rendered non-renewable or would require, as a
condition to the continuation or renewal of such Permit and/or Approval, or any
capital improvements or repairs, except to the extent such revocations, failures
to renew or required capital improvements or repairs would not, in the
aggregate, result in a JV Material Adverse Effect.
(iv) Except as would not, in the aggregate, result in a JV Material
Adverse Effect, neither of the Joint Ventures nor their operations are subject
to any voluntary or involuntary
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obligations or any pending or threatened Claims or Losses respecting (i) any
Remedial Activity (whether at any Joint Venture Facility or any Former Facility
or Disposal Facility of the Joint Ventures), (ii) the conduct of any Hazardous
Material Activities associated with the operations of either Joint Venture, or
(iii) any Environmental Requirement applicable to the operations of either Joint
Venture; and, to the knowledge of each member of the Seller Group, there are no
other facts, circumstances, events or incidents involving the Hazardous Material
Activities associated with the Joint Ventures or their operations which could
give rise to any such obligation or Claims or Losses.
(v) Except as would not result, in the aggregate, in a JV Material
Adverse Effect, no asbestos-containing materials are present on any facility
presently owned, leased, used or occupied by either of the Joint Ventures, other
than any asbestos-containing material which is not friable, complies as of the
Effective Date with Environmental Requirements applicable thereto as of the
Effective Date, and will comply as of the Closing Date with all Environmental
Requirements applicable thereto as of the Closing Date, and is in good repair
according to the current standards and practices governing such material.
(vi) Except as would not result, in the aggregate, in a JV Material
Adverse Effect, other than Hazardous Materials which are reasonably necessary
for the conduct of the operations of either Joint Venture and are properly
stored in the Joint Venture Facilities in accordance with the Environmental
Requirements applicable thereto as of the Effective Date or will be stored on
the Closing Date in accordance with the Environmental Requirements applicable
thereto as of the Closing Date, no Hazardous Material is or at the Closing Date
will be stored or kept at any Joint Venture Facility.
(o) Intellectual Property. Except as set forth in Section 4.2(o) of
---------------------
the Seller Disclosure Letter, neither Joint Venture has received written notice
that the operations or products of any Joint Venture infringes or
misappropriates the Intellectual Property of any Person.
(p) Transactions Among Members of the Seller Group and Joint Ventures.
-----------------------------------------------------------------
Section 4.2(p) of the Seller Disclosure Letter describes all transactions
between any member of the Seller Group and either Joint Venture, or between the
Joint Ventures, during the two (2) year period prior to the date of this
Agreement, or any currently proposed transaction or interaction between such
parties, which involved or is expected to involve an amount in excess of
$500,000 (including all credit arrangements and guarantees and other financing
arrangements).
(q) Existing Financial Arrangements; No Defaults. Section 4.2(q) of
--------------------------------------------
the Seller Disclosure Letter sets forth a true, correct and complete list of all
debt, bank financing agreements and other financing agreements and arrangements
used by or with respect to the Joint Ventures as of the date of this Agreement.
Except as set forth in Section 4.2(q) of the Seller Disclosure Letter, neither
Joint Venture is in breach or default (with or without the giving of notice or
the lapse of time or both) with respect to any such agreement or arrangement.
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IV.3 Knowledge. With respect to those representations qualified by
---------
"knowledge of Seller," Seller shall be deemed to be aware of all matters of
which an executive officer of any member of the Seller Group is aware.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as disclosed in the Buyer Disclosure Letter (which shall make
specific reference to only that particular representation and warranty as to
which each disclosure included therein relates and, to the extent any disclosure
therein relates to more than one representation or warranty, such disclosure
letter shall include a specific cross-reference to the other representations or
warranties to which such disclosure relates), Buyer represents and warrants to
Seller as set forth below:
V.1 Organization and Qualification. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, operate and lease the properties and assets it now owns,
operates and leases and to conduct its business as it is now being conducted.
True, correct and complete copies of the Certificate of Incorporation (or
similar documents) and By-laws (or similar documents) of the Buyer, each with
all amendments thereto, have been delivered to Seller. The Buyer is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its assets or the nature
of its activities makes such qualification or license necessary, except where
the failure to be so qualified or licensed would not, individually or in the
aggregate, have a Buyer Material Adverse Effect.
V.2 Corporate Authority. Buyer has all requisite corporate power and
-------------------
authority to enter into, execute and deliver this Agreement and the Related
Agreements, to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Related Agreements by Buyer and any Buyer
designee (as applicable), the performance by Buyer and any Buyer designee (as
applicable) of its obligations under this Agreement and the Related Agreements,
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the part
of the Buyer and any Buyer designee (as applicable) (assuming due execution and
delivery by each member of the Seller Group of this Agreement and the Related
Agreements) and this Agreement and the Related Agreements constitute legal,
valid and binding obligations of the Buyer (or any Buyer designee) enforceable
against the Buyer (or such designee) in accordance with their terms (subject, as
to the enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and similar Laws affecting creditors' rights, and, with
respect to the remedy of specific performance, equitable doctrines applicable
thereto). No approval by the stockholders of Buyer is required with respect to
the execution and delivery by Buyer of this Agreement and the Related
Agreements, and performance by Buyer of its obligations hereunder or thereunder
including the issuance and delivery of the Common Stock, the Convertible Notes
and the
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Subordinated Notes. Based on Seller's representations and warranties in Section
4.1(u) hereof, no registration statement is required to be filed by Buyer
pursuant to the Securities Act in connection with the issuance and delivery to
Seller of the Common Stock, the Convertible Notes and the Subordinated Notes
(except as provided in the Securities Rights and Restrictions Agreement).
V.3 No Violations. The execution and delivery of this Agreement and the
-------------
Related Agreements by Buyer, the performance by Buyer of its obligations under
this Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby or thereby (including the issuance of the
Common Stock, the Convertible Notes and the Subordinated Notes), do not and will
not conflict with, contravene, result in a violation or breach of or default
under (with or without the giving of notice or the lapse of time or both),
create in any other Person a right or claim of termination, amendment, or
require modification, acceleration or cancellation of, or result in the creation
of any Lien (or any obligation to create any Lien) upon any of the properties or
assets of Buyer under (i) any provision of any of the organizational documents
of Buyer, (ii) any Law applicable to Buyer or any of its properties or assets
assuming the consents, approvals, authorizations or permits and filings or
notifications set forth in Sections 5.6 and 5.7 of the Buyer Disclosure Letter
are duly and timely obtained or made, (iii) the Indenture (as supplemented) and
(iv) Buyer's bank and other financing agreements or any other of its material
agreements, other than any of the foregoing under clause (ii) which would not
(A) result in a Liability of $100,000 in any one case or $500,000 in the
aggregate, or (B) individually or in the aggregate, have a Buyer Material
Adverse Effect.
V.4 Capitalization. Section 5.4 of the Buyer Disclosure Letter contains a
--------------
true, correct and complete description of the shares of stock or other equity or
ownership interests that are authorized, issued and outstanding, of Buyer. All
of such outstanding shares of stock or other equity or ownership interests are
duly authorized, validly issued, fully-paid and nonassessable, and are owned
beneficially and of record by such Persons to be set forth in Section 5.4 of the
Buyer Disclosure Letter, free and clear of any Liens. Section 5.4 of the Buyer
Disclosure Letter also lists all subscriptions, options, warrants, conversion or
other rights, agreements, commitments, arrangements or understandings of any
kind outstanding obligating Buyer, contingently or otherwise, to issue or sell,
or cause to be issued or sold, any shares of capital stock.
V.5 Valid Issuance of Buyer Common Stock. Upon issuance and delivery of
------------------------------------
Buyer Common Stock to Seller at the Closing pursuant to this Agreement against
payment of the consideration therefore contemplated hereby, the Buyer Common
Stock will be validly issued, fully paid and nonassessable free and clear of all
Liens other than (a) Liens set forth in the Securities Rights and Restrictions
Agreement and (b) any Liens which may be created by Seller. The delivery of the
Buyer Common Stock at the Closing will transfer to Seller good, absolute and
valid title to, and beneficial ownership of, the Buyer Common Stock, other than
Liens described in (a) and (b) of the preceding sentence. The issuance and sale
of the Buyer Common Stock pursuant hereto will not give rise to any preemptive
rights or rights of first refusal and will not violate any Law.
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V.6 Valid Authorization of Notes. The Convertible Notes and Subordinated
----------------------------
Notes have been duly and validly authorized, and, when executed and
authenticated and delivered and acquired by Seller in accordance with the terms
of this Agreement, will be valid and binding obligations of Buyer enforceable in
accordance with their terms, and the shares issued upon conversion of the
Convertible Notes shall be validly issued, fully paid and nonassessable free and
clear of all Liens.
V.7 SEC Filings; Financial Statements. Buyer has furnished or made
---------------------------------
available to Seller true, correct and complete copies of its Annual Report on
Form 10-K for the years ended August 29, 1996 and August 28, 1997, and each
report (including any amendments thereto) filed under the Exchange Act by the
Buyer with the SEC since August 29, 1996 (the "Buyer SEC Documents"). All Buyer
SEC Documents complied as to form with the requirements of the Exchange Act.
None of the Buyer SEC Documents as of the dates they were respectively filed
with the SEC contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except to the extent corrected by a subsequently filed
Buyer SEC Document filed prior to the date hereof. Each of the balance sheets
(including any related notes) for the fiscal year or periods ending on August
29, 1996 and thereafter included in the Buyer SEC Documents fairly presents the
financial condition of the Buyer and its Subsidiaries as of its date and each of
the statements of income and changes in financial position (including any
related notes) for the fiscal year or periods ending on August 29, 1996 or
thereafter included in the Buyer SEC Documents fairly presents the results of
operations or changes in cash flows, as the case may be, of the Buyer and its
Subsidiaries for the respective periods set forth therein, in accordance with,
in the case of audited financial statements, GAAP consistently applied except as
otherwise disclosed therein, or, in the case of unaudited financial statements,
GAAP consistently applied, except as otherwise disclosed therein or as otherwise
permitted by the instructions to Form 10-Q of the SEC. All of the foregoing
financial statements are in accordance with the books and records of the Buyer
and its Subsidiaries.
V.8 Litigation. Section 5.8 of the Buyer Disclosure Letter lists all
----------
Claims pending or, to the knowledge of Buyer, threatened with respect to the
transactions contemplated hereby except for such Claims which individually or in
the aggregate have not or could not reasonably be expected to have a Buyer
Material Adverse Effect. Neither Buyer nor its Subsidiaries are in default
under, or in violation of, any judgment, order, writ, injunction or decree of
any Governmental Agency with respect to the transactions contemplated hereby,
except for those defaults or violations which in the aggregate would not have,
or reasonably be expected to have, a Buyer Material Adverse Effect.
V.9 Knowledge. With respect to those representations qualified by
---------
"knowledge of Buyer," Buyer shall be deemed to be aware of all matters of which
an executive officer of Buyer is aware.
ARTICLE VI
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ADDITIONAL AGREEMENTS OF THE PARTIES
VI.1 The Reorganization. Subject to the terms and conditions of this
------------------
Agreement, prior to the Closing Date, Seller will cause the following
transactions (collectively, the "Reorganization"), to be consummated as follows:
(a) Seller shall form prior to the Closing a new direct wholly owned
company under the laws of the Republic of Singapore (of a type selected by
Buyer, which is not described in U.S. Treasury Regulation (S)301.7701-2(b)(8)
and for which a "check-the-box" election to be treated as other than a
corporation has not been made (except where such an election has been made in
accordance with instructions from Buyer pursuant to Section 7.6)) ("Singapore
Newco"). Upon the formation of Singapore Newco, Seller shall cause (i)
Singapore Operating Company to assign, transfer, convey and deliver to Singapore
Newco, and Singapore Newco to accept from Singapore Operating Company, all
right, title and interest in all of Singapore Operating Company's assets
constituting Acquired Assets and Singapore Newco will allot and issue to Seller
all of the capital stock of Singapore Newco (other than the initial two
subscriber shares already held by Seller) and (ii) Singapore Newco to assume
only those liabilities of Singapore Operating Company constituting Assumed
Liabilities.
(b) Subject to Section 6.6, prior to the Closing, Seller shall cause,
through a "contribution-in-kind" transaction pursuant to Sections 2254, 2255,
2342 and 2343 of the Italian Civil Code, (i) Italian Operating Company to
assign, transfer, convey and deliver to a newly formed company under the laws of
Italy (which is not described in U.S. Treasury Regulation (S)301.7701-2(b)(8)
and for which a "check-the-box" election to be treated as other than a
corporation has not been made (except where such an election has been made in
accordance with instructions from Buyer pursuant to Section 7.6)) ("Italian
Newco"), and Italian Newco to accept from Italian Operating Company, all right,
title and interest in all of Italian Operating Company's assets constituting
Acquired Assets in exchange for all of the capital stock of Italian Newco, and
(ii) Italian Newco to assume only those liabilities of Italian Operating Company
constituting Assumed Liabilities. Within forty-five (45) days from the date
hereof, Seller shall cause Italian Operating Company and Italian Newco to
execute a contribution-in-kind agreement (including appropriate schedules of
assets to be assigned to, and specific liabilities (including Contract
liabilities) to be assumed by, Italian Newco) with terms and conditions
reasonably satisfactory to Buyer.
(c) Except as set forth in subparagraphs (a) and (b) above, Singapore
Newco and Italian Newco shall not, and Seller shall cause them not to, incur,
directly or indirectly through any other Person, any obligations or liabilities
of any kind whatsoever or enter into any arrangements with any Person without
the prior written consent of Buyer.
(d) Seller will organize a new wholly owned Delaware corporation or
designate one of its existing Subsidiaries ("Seller Note Purchasing Subsidiary")
to serve as the Seller Note Purchasing Subsidiary. The Seller Note Purchasing
Subsidiary will not hold any Acquired Assets.
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Upon the formation or designation of Seller Note Purchasing Subsidiary, Seller
shall transfer to Seller Note Purchasing Subsidiary, and Seller shall cause
Seller Note Purchasing Subsidiary to accept from Seller an amount equal to the
Cash Payment.
VI.2 Actions of the Seller Group and Conduct of Business Prior to Closing
--------------------------------------------------------------------
Date.
----
(a) Seller shall, and shall cause the Seller Group to, use
commercially reasonable efforts to perform and satisfy all conditions to Closing
to be performed or satisfied by the Seller Group under this Agreement as soon as
possible, but in no event later than the Closing Date.
(b) Except as expressly provided in this Agreement (including in
connection with the Reorganization) from the date hereof and continuing through
the Closing Date, Seller shall, and shall cause each member of the Seller Group
to, conduct the Business in the ordinary course consistent with past practice
and use commercially reasonable efforts to preserve intact its business
organizations and relationships with third parties with respect to the Business,
to preserve the Acquired Assets intact, to comply with all governmental and
regulatory requirements applicable to the Business or Acquired Assets and,
except as provided in Article VIII hereof, to keep available the services of the
present officers and employees of the Seller Group. Without the prior written
consent of Buyer, between the date hereof and the Closing Date, Seller shall
not, and shall cause the Seller Group not to, make any material change in the
conduct of the Business or the Acquired Assets or enter into any transaction
other than in the ordinary course of business consistent with past practice,
except as permitted or required in accordance with the terms herein. Prior to
the Closing, Seller shall, and shall cause the Seller Group to, confer with
Buyer on a regular basis and, subject to applicable laws relating to the
exchange of information, report on significant operational matters and material
decisions affecting the Business, and, in good faith, consult with Buyer
concerning transitional planning for operation of the Business after the
Closing.
(c) Without limiting the generality of the foregoing, Seller shall
not, and shall cause the Seller Group not to, with respect to the Business,
without the express prior written consent of Buyer, or except as otherwise
contemplated hereby, (i) grant any salary increase to any employee other than
normal merit and cost of living increases or grant any severance or termination
pay to any director, officer or employee, (ii) enter into any new, or amend or
alter any existing, bonus, incentive compensation, profit sharing, retirement,
pension, group insurance, death benefit or other fringe benefit plan, trust
agreement or arrangement adopted by it with respect to its employees, or any
employment or consulting agreement, other than as required by law, (iii)
terminate any existing employee benefit plan, (iv) establish, adopt, enter into
or amend any collective bargaining agreement, (v) change its accounting and Tax
policies or procedures in any material respect, (vi) make any compensation or
benefits payments to any employees of the Seller Group other than as
contemplated by compensation or benefits plans or agreements existing as of the
date of this Agreement, (vii) sell, lease, license or otherwise dispose of any
material assets or property except (A) pursuant to existing contracts or
commitments or (B) in the ordinary course
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of business consistent with past practices, (viii) revalue any of the assets
included in the Acquired Assets, including, without limitation, writing off any
accounts receivable other than in the ordinary course of business, (ix) except
in the ordinary course of business, make any Tax election with respect to the
Acquired Assets, settle or compromise any matter relating to Taxes, amend any
Tax Return or make a claim for a Tax refund, (x) fail to maintain in full force
and effect the material regulatory consents and authorizations necessary or
required to conduct the Business, (xi) pay, discharge or satisfy any claim or
liabilities relating to the Acquired Assets, other than in the ordinary course
of business and consistent with past practice, (xii) alter, amend or settle any
dispute under any Contract of the Seller Group relating to the Business or
Acquired Assets, except in the ordinary course of business, (xiii) fail to
defend or initiate any material matter, or proceed with any material matter,
before any Governmental Agency, that is necessary and commercially reasonable to
protect Acquired Assets, (xiv) fail to maintain Acquired Assets in customary
repair, order and condition in all material respects, (xv) fail to comply in all
material respects with all legal and regulatory requirements and all contractual
obligations applicable to the Business and Acquired Assets, (xvi) terminate,
replace, amend or otherwise modify any of the Transferred Contracts or waive any
of the obligations of the parties to such agreements or any of the Seller
Group's rights under any of such agreements, or (xvii) agree to commit to do any
of the foregoing.
(d) Without the consent of Buyer, Seller shall not, and shall cause
the Seller Group not to, take or omit to take any action with the intention to
cause any of their representations and warranties hereunder to be inaccurate in
any material respect at, or as of any time prior to, the Closing.
VI.3 Regulatory Matters.
------------------
(a) The parties hereto shall cooperate with each other and use all
commercially reasonable efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all Permits and/or Approvals which are
necessary or advisable to consummate the transactions contemplated by this
Agreement. Each of Seller and Buyer shall have the right to review in advance,
and to the extent practicable each will consult the other on, in each case
subject to applicable Laws relating to the exchange of information, all the
information relating to Seller and Buyer, as the case may be, and any of their
respective Subsidiaries, which appears in any filing made with, or written
materials submitted to, any third party or any Governmental Agency in connection
with the transactions contemplated by this Agreement; provided, however, that
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nothing contained herein shall be deemed to provide either party with a right to
review any information provided by the other party to any Governmental Agency on
a confidential basis in connection with the transactions contemplated hereby.
In exercising the fore going right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties hereto agree that they
will consult with each other with respect to the obtaining of all Permits and/or
Approvals necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other appraised of the status of
matters relating to completion of the transactions contemplated herein.
(b) Each of Seller and Buyer shall, upon request, furnish the other
with all information concerning itself, its Subsidiaries, directors, officers
and stockholders and such other
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matters as may be reasonably necessary or advisable in connection with any
statement, filing, notice or application made by or on behalf of Seller, Buyer
or any of their respective Subsidiaries to any Governmental Agency in connection
with the transactions contemplated by this Agreement.
VI.4 Working Capital Requirement.
---------------------------
(a) Within forty-five (45) days following the Closing Date, Seller
shall cause to be prepared and delivered to Buyer an unaudited balance sheet of
the Business as of the Closing Date (the "Preliminary Balance Sheet"). The
Preliminary Balance Sheet will be prepared in accordance with GAAP consistently
applied and consistent with GAAP principles used to prepare the March Balance
Sheet. In the event Working Capital at the Closing Date as reflected on the
Preliminary Balance Sheet is less than the Target Amount, then Seller shall pay
to Buyer an amount equal to the aggregate of the shortfall. In the event
Working Capital at the Closing Date as reflected on the Preliminary Balance
Sheet is in excess of the Target Amount, then Buyer shall pay to Seller an
amount equal to the excess. All amounts payable (the "Working Capital
Requirement") under this subsection 6.4(a) shall be paid in cash within five (5)
days after the preparation of the Preliminary Balance Sheet by wire transfer of
immediately available funds to an account designated in writing by the
recipient. For purposes of this Agreement, "Target Amount" means U.S. $150
million; provided, however, that if the Closing has not occurred by September
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30, 1998 (the "Target Closing Date"), the U.S. $150 million amount shall be
decreased (the "Working Capital Reduction") by U.S. $5 million at the end of
each fourteen-day period commencing on the Business Day immediately following
the Target Closing Date; provided, further, that, notwithstanding the
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immediately preceding proviso, the Working Capital Reduction shall not take
effect in the event the Closing has not occurred by reason of the failure to
comply with any material covenant or agreement in this Agreement by Seller which
has not been cured within ten (10) days following receipt by Seller of notice of
such breach or failure to comply.
(b) Within 120 days following the Closing Date, Buyer shall cause to
be prepared and delivered to Seller an audited balance sheet of the Business as
of the Closing Date (the "Adjusted Balance Sheet"). The Adjusted Balance Sheet
will be prepared in accordance with GAAP consistently applied and consistent
with the GAAP principles used to prepare the March Balance Sheet. Working
Capital as of the Closing Date shall be derived from the Adjusted Balance Sheet.
Following delivery by Buyer to Seller of the Adjusted Balance Sheet, Buyer shall
give to Seller, and any independent auditors retained by Seller, reasonable
access during Buyer's business hours to those books and records of the Business
in the possession of Buyer and any personnel which relate to the preparation of
the Adjusted Balance Sheet and to the workpapers of Buyer and its independent
auditors for purposes of resolving any disputes concerning the Adjusted Balance
Sheet and the calculation of Working Capital.
(c) Seller shall have thirty (30) days following delivery of the
Adjusted Balance Sheet during which to notify Buyer in writing (the "Notice of
Objection") of any good faith objections to the calculation of Working Capital
or the Adjusted Balance Sheet as it affects such calculation, setting forth a
reasonably specific and detailed description of its objections and the dollar
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amount of each objection. If Seller objects to the Adjusted Balance Sheet, or
Buyer's calculation of Working Capital as reflected thereon, Buyer and Seller
shall attempt to resolve any such objections within fifteen (15) days of the
receipt by Buyer of the Notice of Objection.
(d) If Buyer and Seller are unable to resolve any such dispute within
the fifteen (15) day period referred to in Section 6.4(c) above, Buyer and
Seller shall each submit the name of another "big six" independent accounting
firm which does not at the time provide, and has not in the prior two years
provided, services to either Buyer or Seller or any Affiliate of Buyer or
Seller, and the firm shall be selected by lot from these two firms. Each of the
parties to this Agreement shall, and shall cause their respective Affiliates and
representatives to, provide full cooperation to such independent accounting firm
(the "Independent Accounting Firm"). The Independent Accounting Firm shall (x)
act in its capacity as an expert and not as an arbitrator, (y) review only those
matters as to which there is a dispute between the parties and (z) be instructed
to reach its conclusions regarding any such dispute within thirty (30) days
after its appointment and provide a written explanation of its decision. In the
event that Seller and Buyer submit any dispute to arbitration, each such party
may submit a "position paper" to the Independent Accounting Firm setting forth
the position of such party with respect to such dispute, to be considered by
such Independent Accounting Firm as it deems fit. The determination of the
Independent Accounting Firm shall be final and binding on the parties and shall
be deemed a final arbitration award that is enforceable pursuant to all terms of
the Federal Arbitration Act, 9 U.S.C. Sec. 1 et seq. Any expenses relating to
the engagement of the Independent Accounting Firm shall be shared equally by
Seller and Buyer.
(e) If Seller does not deliver the Notice of Objection in accordance
with Section 6.4(c) above (i.e., within a thirty day period), the Adjusted
Balance Sheet (together with Buyer's calculation of Working Capital reflected
thereon), shall be deemed to have been accepted by all of the parties to this
Agreement and shall become the "Closing Balance Sheet." In the event that
Seller delivers a Notice of Objection in accordance with the provisions above
and Buyer and Seller are able to resolve such dispute by mutual agreement, the
Adjusted Balance Sheet, together with Buyer's calculation of Working Capital
reflected thereon, to the extent modified by mutual agreement of such parties,
shall be deemed to have been accepted by all of the parties to this Agreement
and shall become the "Closing Balance Sheet." In the event that Seller delivers
a Notice of Objection in accordance with the provisions above and Buyer and
Seller are unable to resolve such dispute by mutual agreement, the determination
of the Independent Accounting Firm shall be final and binding on the parties and
the Adjusted Balance Sheet, together with Buyer's calculation of Working Capital
reflected thereon, to the extent modified by the Independent Accounting Firm,
shall be deemed to have been accepted by all of the parties to this Agreement
and shall become the "Closing Balance Sheet." The calculations of Working
Capital reflected on any such Closing Balance Sheet shall be conclusive and
binding on all of the parties to this Agreement and no further adjustments shall
be made thereto.
(f) In the event that Working Capital as reflected on the Closing
Balance Sheet is less than the Target Amount when added to the Working Capital
Requirement actually paid, then Seller shall pay to Buyer in cash within five
(5) days after determination of the Closing Balance
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Sheet an amount equal to the aggregate of the shortfall (the "Shortfall")
together with interest thereon at the rate of 6% from the Closing Date until the
date of payment of the Shortfall, and if not made within five (5) days after
determination of the Closing Balance Sheet, taking into account all Notice of
Objection and dispute resolution periods set forth in this Section 6.4, the
Shortfall shall bear interest from the Closing Date until the date of payment of
the Shortfall at the rate of 15% per annum. In the event that Working Capital as
reflected on the Closing Balance Sheet is greater than the Target Amount when
added to the Working Capital Requirement actually paid, then Buyer shall pay to
Seller in cash within five (5) days after determination of the Closing Balance
Sheet an amount equal to the aggregate of the excess (the "Excess") together
with interest thereon at the rate of 6% from the Closing Date until the date of
payment of the Excess, and if not made within five (5) days after determination
of the Closing Balance Sheet, taking into account all Notice of Objection and
dispute resolution periods set forth in this Section 6.4, the Excess shall bear
interest from the Closing Date until the date of payment of the Excess at the
rate of 15% per annum. Any and all amounts payable in accordance with this
Section 6.4(f) shall be made by wire transfer of immediately available funds to
an account designated in writing by either Seller or Buyer, as the case may be.
VI.5 Investment Incentives. Seller shall use all commercially reasonable
---------------------
efforts to assist Buyer in obtaining and maintaining incentives from the EDB,
including without limitation requesting TECH to assist Buyer in negotiating with
the EDB investment incentives for the benefit of Singapore Newco after giving
effect to the Reorganization and the other transactions contemplated in this
Agreement.
VI.6 Italian Operations. Seller and Buyer agree to negotiate in good
------------------
faith and to use all commercially reasonable efforts to agree, within forty-five
(45) days after the date hereof, (i) on mutually acceptable terms and conditions
to apply to the transfer at the Closing of those Acquired Assets and Assumed
Liabilities associated with Seller's Italian operations to be transferred by
Seller to Buyer pursuant to the terms of this Agreement and (ii) on an
appropriate amendment or supplement to this Agreement adequately reflecting such
terms and conditions, including appropriate amendments to the conditions
precedent to the Closing.
VI.7 Transition Services. Seller and Buyer shall negotiate in good faith
-------------------
the Transition Services Agreement in substantially the form attached hereto as
Exhibit I as may be reasonably modified by the mutual agreement of the parties,
pursuant to which Seller shall provide Buyer, on a transitional basis following
the Closing Date, with all services historically provided to the Business
(hereinafter, the "Transition Services") reasonably necessary to support the
continued operation of the Business (including the operations of Italian
Operating Company and Singapore Operating Company) and pursuant to which, from
the Closing Date until the first anniversary thereof, Buyer will (i) request
that KTI continue to manufacture and supply to Buyer for resale to Seller SDRAM
or DRAM products for military and aerospace applications in substantially the
same aggregate volumes as are currently supplied and, to the extent such
products are so available from KTI to Buyer, Buyer shall use commercially
reasonable efforts to supply such products to Seller in substantially the same
aggregate volumes as are currently supplied; provided, however, that Buyer shall
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not be liable for the failure to supply such products to Seller in the event of
KTI's failure to
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manufacture and supply such products to Buyer for resale to Seller, and (ii) use
commercially reasonable efforts to continue to provide testing services for such
products at the Singapore assembly/test facility in substantially the same
manner as currently provided, in each case, at prices to be mutually agreed
upon.
VI.8 Working Capital. Seller shall, and shall cause the Seller Group to,
---------------
use commercially reasonable efforts to manage the Working Capital of the
Business in the ordinary course consistent with past practice.
VI.9 Financial Statements. As soon as practicable following the date
--------------------
hereof and prior to the Closing, Seller shall deliver to Buyer with respect to
the Business on a combined basis (including Seller's JV Interests as an equity
investment) audited balance sheets as of December 31, 1996 and as of December
31, 1997, together with the related audited statements of income and cash flow
for the twelve-month periods ended December 31, 1996 and December 31, 1997, the
unaudited statement of income and cash flow for the three-month period ended
March 31, 1998, and the unaudited balance sheet as of June 30, 1998 and the
related unaudited statement of income and cash flow for the six-month period
then ended. All such financial statements shall be prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby
(except, in the case of the unaudited financial statements, for the absence of
notes thereto) and in the case of the balance sheets, consistent with the GAAP
principles used to prepare the March Balance Sheet. Seller shall make available
to Buyer, and Buyer's auditors, Seller's work papers and backup materials used
in preparation of all such financial statements.
VI.10 Seller Disclosure Letter. As soon as practicable and in no event
------------------------
later than the date thirty (30) days after the date hereof, Seller shall deliver
to Buyer the Seller Disclosure Letter which shall include all of Seller's
disclosure schedules contemplated by this Agreement. The Seller Disclosure
Letter shall make specific reference to only that particular Section (or, with
respect to representations and warranties, that particular subsection) as to
which each disclosure schedule included therein relates and, to the extent any
disclosure schedule included therein relates to more than one Section (or more
than one representation and warranty), then such disclosure schedule shall
include a specific cross-reference to the other Sections (or other
representations and warranties) to which such disclosure schedule relates.
Buyer shall have fifteen (15) days from the date of its receipt of the Seller
Disclosure Letter in which to object to any of Seller's disclosure included in
such Seller Disclosure Letter, which objection shall be made by sending to
Seller a written notice (a "Disclosure Objection").
VI.11 Buyer Disclosure Letter. As soon as practicable and in no event
-----------------------
later than the date thirty (30) days after the date hereof, Buyer shall deliver
to Seller the Buyer Disclosure Letter which shall include all of Buyer's
disclosure schedules contemplated by this Agreement. The Buyer Disclosure Letter
shall make specific reference to only that particular Section (or, with respect
to representations and warranties, that particular subsection) as to which each
disclosure schedule included therein relates and, to the extent any disclosure
schedule included therein relates to more than one Section (or more than one
representation or warranty), then such disclosure schedule shall include a
specific cross-reference to the other Sections (or other representations and
warranties) to
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which such disclosure schedule relates. Seller shall have fifteen (15) days from
the date of its receipt of the Buyer Disclosure Letter in which to object to any
of Buyer's disclosure included in such Buyer Disclosure Letter, which objection
shall be made by sending to Seller a written Disclosure Objection notice.
VI.12 JV Amendments. Seller and Buyer agree to negotiate in good faith and
-------------
to use all commercially reasonable efforts to agree within forty-five (45) days
after the date hereof, on mutually acceptable terms and conditions of the JV
Amendments as well as amendments to all debt, credit or financing Contracts to
which any of the Joint Ventures is a party or to which any Seller or any of its
Affiliates is a party which Contract is for the benefit of the Joint Venture.
VI.13 Acquired Facilities. The following expenses of the Acquired
-------------------
Facilities, which shall be reflected in a closing statement (the "Closing
Statement") shall be apportioned between Seller and Buyer at the Closing in
accordance with the following:
(a) Seller shall pay the full amount of any real estate Taxes, bonds,
assessments or other governmental levies against the Acquired Facilities, which
are not Permitted Liens, on or before the Closing Date.
(b) Except as expressly provided to the contrary in this Agreement,
rent, insurance premiums, amounts payable under the Transferred Contracts,
operating expenses, utility consumption fees and any other recurring occupancy
charges applicable to the Acquired Facilities under the Transferred Contracts
shall be prorated as of the Closing Date. In this regard, Seller shall cause
all the utility meters to be read on the Closing Date, and will be responsible
for the cost of all utilities used prior to the Closing Date.
(c) Except as herein expressly provided to the contrary, Seller shall
pay for all costs customarily associated with the conveyance of the Acquired
Facilities to Buyer in accordance with this Agreement (including, without
limitation, all Transfer Taxes, recording or registration fees and the like
customarily paid by sellers of real property in the jurisdiction in which the
Acquired Facilities are located); provided, however, that the cost of any title
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insurance policy and title opinions shall be paid by Buyer.
(d) Real estate escrow fees and all other customary real estate
conveyancing expenses associated with the conveyance of the Acquired Facilities
shall be paid fifty percent (50%) by Buyer and fifty percent (50%) by Seller.
(e) If any of the aforesaid prorations cannot be calculated accurately
on the Closing Date, then they shall be estimated at the Closing Date and
adjusted to the actual allocation as soon after the Closing Date as feasible.
Either party owing the other party a sum of money based on such subsequent
adjustment shall promptly pay said sum to the other party, together with
interest thereon at the rate of fifteen percent (15%) per annum from the Closing
Date to the date of payment if payment is not made within ten (10) days after
delivery of a bill therefor.
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VI.14 Certain Rights. Buyer shall have the option, upon delivery of a
--------------
written notice to Seller on or prior to the Closing, to require Seller, to the
extent permitted, to transfer to Buyer, without further consideration from Buyer
to Seller and without costs to Seller or effect on Seller's own license not
related to the Business, Seller's rights and benefits under the agreement
between Seller and Rambus Inc. and thereupon, such license shall be deemed an
Acquired Asset hereunder.
VI.15 Licenses of Intellectual Property.
---------------------------------
(a) Seller hereby grants to Buyer (and any successor to Buyer or to
any division or line of business of Buyer (the "Successor")) a worldwide,
perpetual, non-exclusive, fully paid, royalty free license under all
Intellectual Property (other than Patents and Acquired Intellectual Property)
(the "Licensed IP") of any member of the Seller Group owned or licensable by any
such member to operate the Business substantially in the manner such Business
was operated by the Seller Group and to make, have made, use, sell, offer for
sale and import any products. The Licensed IP may not be sublicensed or
transferred by Buyer (or its Successors), except in connection with the
licensing or transfer by Buyer (or its Successors), of substantial other
Intellectual Property and under substantially the same terms and conditions as
such other Intellectual Property of Buyer (or its Successors), is licensed or
transferred; provided, however, that such sublicense or transfer may not grant
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to the sublicensee or transferee broader rights than that granted to Buyer
hereunder. In addition, Buyer or its Successors shall not transfer or
sublicense any Trade Secrets constituting Licensed IP except pursuant to a non-
disclosure agreement at least as protective of such Trade Secrets as it is of
Buyer's (or its Successor's), own Trade Secrets.
(b) Subject to, and without in any way limiting the provisions of the
non-compete provision set forth in Section 6.25 hereof, Buyer hereby grants to
Seller a worldwide, perpetual, non-exclusive, fully paid, royalty free license
under the Acquired Intellectual Property, to, make, have made, use, sell, offer
for sale and import any products. The Acquired Intellectual Property licensed
to Seller in accordance with the foregoing may not be sublicensed or transferred
by Seller except in connection with the licensing or transfer by Seller of
substantial other Intellectual Property of Seller and under substantially the
same terms and condition as such other Intellectual Property of Seller is
licensed or transferred; provided, however, that such sublicense or transfer may
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not grant to the sublicensee or transferee broader rights than granted to Seller
hereunder. In addition, Seller shall not transfer or sublicense any Trade
Secrets constituting Transferred Intellectual Property except pursuant to a non-
disclosure agreement at least as protective of such Trade Secrets as it is of
Seller's own Trade Secrets and otherwise in accordance with Section 6.31 hereof.
VI.16 Certain Software.
----------------
(a) Without limiting Section 6.15, in order to effect the transactions
contemplated by this Agreement and to permit Buyer to operate the Business
substantially in the manner such Business was operated by the Seller, Seller
agrees to and hereby grants to Buyer a worldwide, perpetual, nonexclusive, fully
paid up royalty free license to use, distribute, copy and make and own
derivative works from the source code and documentation for all software owned
or licensable by
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any member of the Seller Group, and not part of the Acquired Assets, and
currently being used in the Business. Seller shall use commercially reasonable
efforts to cause Gore to grant to Buyer a license to the source code and
documentation for the "Gore Software," including without limitations the "Works"
and "WorkCell" programs and all tools and documentation relating thereto (the
"Gore Software"), the license for which shall be paid by Buyer, with terms
satisfactory to Buyer. To the extent Seller is permitted to do so without cost
to Seller, Seller shall, at no charge by Seller to Buyer, for a period of two
years provide Buyer with all upgrades, enhancements and fixes to the Gore
Software made by or for Seller to the extent related to the Business.
(b) To permit Seller to continue its own operations substantially in
the manner they were performed prior to the Closing Date, Buyer agrees to and
hereby grants to Seller a worldwide, perpetual, nonexclusive, royalty free
license to use, distribute, copy and make derivative works from the source code
and documentation for all software transferred as Acquired Assets as described
in Exhibit A and currently used in Seller operations, and to the extent the
right to grant such license was acquired by Buyer from Seller.
(c) All costs, if any, payable by Seller to third parties with respect
to third party software licenses to be transferred or subject to sublicense for
the benefit of Buyer pursuant to this Agreement or any Related Agreement shall
be paid by Buyer; provided, however, that Buyer may elect to forego such
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transfer or sublicense, in which event Buyer shall not be obligated to pay such
costs with respect thereto.
VI.17 Access to Information.
---------------------
(a) Upon reasonable notice and subject to applicable laws relating to
the exchange of information, Seller shall, and shall cause the Seller Group to,
afford to the officers, employees, accountants, counsel, consultants and other
representatives of Buyer, reasonable access, during normal business hours during
the period prior to the Closing Date, to all Acquired Assets, including Acquired
Facilities, books, contracts, commitments, records, officers, employees,
accountants, counsel and other representatives of any member of the Seller Group
and, during such period, it shall make available to Buyer all information
concerning the Business, the Joint Ventures, the Acquired Assets, or
Proceedings, or Claims or Losses relating thereto, as Buyer may reasonably
request ("Access Rights"). With respect to the Joint Ventures, Seller shall
request that the Joint Ventures provide Access Rights to Buyer; provided,
--------
however, that Seller shall not be liable for the failure of any of the Joint
-------
Ventures to afford Buyer such Access Rights. Such Access Rights shall include,
without limitation, the performance by Buyer, at Buyer's expense, of any
inspections, testings, investigations, and groundwater and soil sampling or
other review of the physical condition of the Acquired Facilities as may be
deemed necessary by Buyer. During the period of such access, Buyer and its
consultants or other representatives shall not unreasonably interfere with the
ongoing operation of the Business. Upon request of Buyer, Seller shall also use
commercially reasonable efforts to request that the Joint Ventures grant Access
Rights to Buyer.
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(b) Buyer shall take reasonable steps to avoid and minimize any
disruption of the Acquired Facilities through the exercise of its Access Rights.
Buyer shall indemnify and hold Seller harmless from and against any and all
loss, cost, claim or expense arising out of the exercise of its Access Rights at
the Acquired Facilities. In the event Buyer performs an environmental or
endangered species site assessment as part of the inspection of the Acquired
Facilities, Seller shall be afforded at least two (2) Business Days' prior
notice of, and the right to be present and/or collect split samples during any
activity on the Acquired Facilities in connection with such assessment. Promptly
after Buyer's receipt thereof, Buyer agrees to furnish Seller with a copy of any
analytical results and shall permit Seller to comment upon the consultant's
report prior to finalization and shall provide Seller with any final report.
(c) No investigation by Buyer or its representatives shall affect the
representations, warranties, covenants or agreements of Seller set forth in this
Agreement.
VI.18 Tax Parameters; Price Allocation. The valuation and allocation of
--------------------------------
the purchase price and other consideration exchanged in connection with the
transactions described herein shall be as mutually agreed by Buyer and Seller in
accordance with the applicable provisions of Section 1060 of the Code in
accordance with the provisions in Exhibit H (such valuation and allocation being
referred to herein as the "Price Allocation"). The Price Allocation shall also
apply for purposes of the asset transfers to Singapore Newco and Italian Newco.
Exhibit H also sets forth certain parameters with respect to the transactions
contemplated hereby (the "Tax Parameters"). Buyer and Seller agree to negotiate
in good faith in order to determine the Price Allocation as soon as practicable.
If Buyer and Seller are unable to agree on the Price Allocation, the dispute
shall be resolved in accordance with the procedures set forth in Section 6.4(d)
hereof and the provisions of this Section 6.18. Each party (and their respective
Affiliates) hereto shall at its own expense adopt and abide by such Price
Allocation and Tax Parameters for purposes of all Tax Returns filed by them and
shall not take any position inconsistent therewith in connection with any
examination of any Tax Return, any refund claim, or any judicial litigation
proceeding but only if doing otherwise in such judicial litigation proceeding
would materially prejudice the other party, or otherwise until there has been a
final "determination" (within the meaning of Code Section 1313(a)) or any other
event which finally and conclusively establishes the amount of any liability for
Taxes. In the event that the Price Allocation is disputed by any Taxing
authority, the party receiving notice of the dispute shall promptly notify the
other parties hereto of such dispute and the parties hereto shall consult with
each other concerning resolution of the dispute.
VI.19 Notices of Certain Events. Seller shall promptly notify Buyer of (i)
-------------------------
any notice or other communication from any Person alleging that the consent of
such Person is or may be required in connection with the transactions
contemplated by this Agreement, (ii) any notice or other communication from any
Governmental Agency in connection with the transactions contemplated by this
Agreement, and (iii) any Claims commenced or, to the knowledge of Seller,
threatened against, relating to or involving or otherwise affecting the Business
or the Acquired Assets that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant
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to Section 4.1(l) or that relate to the consummation of the transactions
contemplated by this Agreement.
VI.20 Bulk Sales Waiver. Buyer and Seller hereby waive compliance with any
-----------------
applicable bulk sale laws in connection with the transactions contemplated by
this Agreement; provided, however, that Seller shall indemnify and hold Buyer
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and its Affiliates harmless from and against any Losses arising out of
noncompliance with any such laws.
VI.21 Expenses. Each party hereto agrees to bear its own expenses,
--------
including any applicable broker's or finder's fee, in connection with the
negotiation and preparation of this Agreement and the Related Agreements and its
performance hereunder and thereunder, except as otherwise expressly provided
herein, or in any of the Related Agreements.
VI.22 Transfer Taxes; Transfer and Recording Fees.
-------------------------------------------
(a) Seller shall be solely responsible for and shall pay (or cause to
be paid) on or before the due date any and all Transfer Taxes. Buyer shall
cooperate with Seller in connection with any Tax Returns related to Seller's
payment of such Taxes, and in executing customary documents in order to attempt
to establish exemptions from Texas sales Tax and other transaction Taxes.
(b) Payment of all costs, expenses and fees arising or incurred in
connection with any claim for or contest of Transfer Taxes shall be borne by
Seller. Upon receipt by Buyer of a refund of all or part of any claim for which
a party has made payment under this Section 6.22 and with respect to which Buyer
has received a payment from Seller, or Seller has received from Buyer, Buyer
shall pay to Seller, or Seller shall pay to Buyer, the amount of the refund.
(c) Buyer shall be entitled to pay, or cause to be paid, any Transfer
Tax and seek reimbursement from Seller, plus interest, to the extent a failure
to pay would result in a Lien on the Acquired Assets or otherwise adversely
affect the Business.
VI.23 Shutdown Costs. In connection with Seller's suspension of operations
--------------
at the Twinstar Facility subsequent to the date hereof and prior to the Closing,
Seller shall use all commercially reasonable efforts to terminate such
operations in a "recoverable to current operating condition," and will consult
with Buyer to achieve that goal and to limit the Shutdown Costs associated
therewith to those that are reasonably necessary. In performing such
activities, Seller shall comply with all applicable Environmental Requirements,
Contracts, Laws, Permits and/or Approvals applicable to such activities.
Subsequent to such suspension of operations and prior to the Closing, Seller
shall use all commercially reasonable efforts to preserve the value of the
Twinstar Facilities. Buyer shall reimburse Seller at the Closing for 50% of the
Shutdown Costs actually incurred by Seller; provided, however, that Seller
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delivers to Buyer at least two (2) Business Days prior to Closing a statement in
reasonable detail summarizing the nature and amount of such Shutdown Costs.
Notwithstanding anything to the contrary contained herein, Buyer shall not be
obligated to reimburse Seller for any Shutdown Costs unless the Closing has
occurred.
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VI.24 Securities Act Compliance; Restrictions on Sale. Seller understands
-----------------------------------------------
and acknowledges that the Securities issuable at the Closing, shall be issued
pursuant to an exemption under the Securities Act from the registration
requirements of Section 5 of the Securities Act, and at the time of such
issuance will not have been registered under the Securities Act or other
applicable state securities laws. The availability of such exemption is
conditioned, in part, upon the representation of Seller, that the Securities
will not be sold or otherwise distributed except as expressly provided herein.
VI.25 Covenant Not to Compete.
-----------------------
(a) Seller covenants and agrees that for a period of three (3) years
following the Closing Date, neither Seller nor any Affiliates of Seller
(excluding any employee or pension fund or other similar Person acting in a
fiduciary capacity) shall, directly or indirectly, as principal, partner, agent,
employee, consultant, stockholder, or otherwise, anywhere in the world (the
"Territory"), engage, directly or indirectly, in the manufacture or sale of
Memory Products. Seller also covenants and agrees that for a period of five (5)
years following the Closing Date, neither Seller nor any Affiliate of Seller
(excluding any employee or pension fund or other similar Person acting in a
fiduciary capacity) shall, directly or indirectly, as a principal, partner,
agent, employee, consultant, stockholder, or otherwise, anywhere in the
Territory, engage, directly or indirectly, in the manufacture or sales of Memory
Products through a foundry or exercise any "have made" rights granted in the
Cross-License Agreement for the manufacture or sale of Memory Products;
provided, however, that Seller may fulfill its contractual obligations effective
-------- -------
as of the date hereof in accordance with the terms of the Transition Agreement,
as amended to the date hereof.
(b) Buyer and Seller acknowledge and agree that compliance with the
covenant contained in this Section 6.25 is necessary to protect Buyer and its
Subsidiaries and that a breach of such covenant would result in irreparable and
continuing damage for which there would be no adequate remedy at law. Seller
agrees that in the event of any breach of said covenant, Buyer shall be entitled
to injunctive relief and to such other and further relief as is proper under the
circumstances. Seller agrees that this restriction on competition shall be
deemed to be a series of separate covenants not-to-compete for each year within
the three-year and five-year periods of non-competition and separate covenants
not-to-compete for each state within the United States and each country in the
world. If any court of competent jurisdiction shall determine the foregoing
covenant to be unenforceable with respect to the term thereof or the scope of
the subject matter or geography covered thereby, then such covenant shall
nonetheless be enforceable by such court against such other party or upon such
shorter term or within such lesser scope as may be determined by the court to be
reasonable and enforceable.
(c) In the event that Seller shall be in violation of the
aforementioned restrictive covenants, then the time limitation thereof shall be
extended for a period of time during which such breach or breaches shall occur.
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(d) Seller covenants on behalf of itself and each member of the Seller
Group not to use, or to sell, assign or otherwise extend the benefits to any
Person from any Non-Assignable Contract in a manner which is competitive with
the Business as owned and operated by Buyer.
Notwithstanding the foregoing: (i) Seller or its Affiliates may acquire a
controlling interest in, or a majority of the assets of, any Person having not
more than 5% of its sales (based on its latest annual audited financial
statements) attributable to the manufacture or sale of Memory Products;
provided, however, that Seller shall, and shall cause its Affiliates, to use
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commercially reasonable efforts to promptly divest itself of or shutdown that
portion of the operations of such Person engaged in the manufacture or sale of
Memory Products; (ii) Seller or its Affiliates may acquire up to 2% of the
outstanding capital stock or other ownership interest in any Person engaged
principally in the manufacture or sale of Memory Products having a class of
equity securities listed on any national or international securities exchange;
and (iii) Seller or its Affiliates may engage in the assembly, packaging and/or
sale of Memory Products for sale to customers solely for use in military and
aerospace applications.
VI.26 Collection of Accounts. Seller agrees that, after the Closing, it
----------------------
will promptly transfer to or deliver to Buyer any cash or other property
received directly or indirectly by Seller in respect of any accounts receivable
of the Business, constituting Acquired Assets, including any amounts receivable
as interest.
VI.27 Public Disclosure. No party hereto shall issue any public statement
-----------------
or communication regarding this Agreement, the subject matter of this Agreement
or the transactions contemplated hereby, except for such disclosures as are
required to comply with applicable law or the rules of any national securities
exchange, without the prior written approval of the other parties. If any such
disclosure is required by law or the rules of any national securities exchange,
the disclosing party agrees to give the nondisclosing party prior notice and an
opportunity to comment on the proposed disclosure.
VI.28 Assistance with Audit. Following the Closing, each party will
---------------------
provide the other party and their independent public accountants access to (and
use commercially reasonable efforts to cause their independent public
accountants to provide the other party and their independent public accountants
access to) such books, records, workpapers and data as may be reasonably
requested by such other party to allow such other party and their independent
public accountants to conduct an audit or review of the Business for such
periods as such other party may require for their preparation of the Preliminary
Balance Sheet, the Adjusted Balance Sheet and the Closing Balance Sheet, as
applicable, as well as for their financial reporting purposes, including that
required in connection with any registration statement or report to be filed by
Buyer with the SEC or other Governmental Agency. The parties mutually agree to
reasonably assist each other and their independent accountants in conducting any
such audit or review. The parties mutually agree to use their commercially
reasonable efforts to cause their independent public accountants to provide each
other with any such consents of their independent public accountants necessary
for such party to satisfy such requirements with the SEC under applicable
accounting rules. On and after the Closing Date, Buyer
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will afford to Seller and its agents reasonable access to the books of account,
financial and other reports, information, employees and auditors to the extent
the same primarily relate to periods prior to the Closing and which are
necessary for Seller in connection with any tax audit, investigation, inquiry by
a Governmental Agency (including with respect to government subsidies), dispute,
litigation or other similar matter relating to the Acquired Assets or the
Assumed Liabilities. On and after the Closing Date, Seller will afford to Buyer
and its agents reasonable access to the books of account, financial and other
reports, information, employees and auditors to the extent the same primarily
relate to periods prior to the Closing and which are necessary for Buyer in
connection with any tax audit, investigation, inquiry by a Governmental Agency
(including with respect to government subsidies), dispute, litigation or other
similar matter relating to the Acquired Assets or the Assumed Liabilities.
VI.29 Use of Proceeds. Buyer shall use the U.S. $750 million received from
---------------
Seller at the Closing for general corporate purposes, including working capital
and capital expenditures (but excluding financing the purchase price of any
acquisitions or use in the business of Micron Electronics, Inc.).
VI.30 Maintenance of Trade Secrets. Seller shall neither use nor disclose
----------------------------
to any Person, and shall otherwise maintain the confidentiality of, all
materials, information and things embodying or constituting Trade Secrets that
are Acquired Intellectual Property and Seller shall neither take, nor fail to
take, any action that would adversely affect Buyer's rights in, or the value of,
any of the Trade Secrets constituting Acquired Intellectual Property.
VI.31 Assignment of Contracts.
-----------------------
(a) For purposes of this Agreement, including Sections 2.1 and 2.2
hereof, "Transferred Contracts" shall mean each Contract to which Seller, any of
its Subsidiaries or any of their Affiliates is a party primarily related to or
primarily used in the Business (i) that was entered into in the ordinary course
of business consistent with past practices and not of a type required to be
listed in the Seller Disclosure Letter pursuant to Section 4.1 or 4.2 hereof, or
(ii) listed on Schedule 6.31 to this Agreement to be prepared by Buyer and
delivered to Seller in accordance with this Section 6.31(a) (the "Transferred
Contract Schedule"). The Transferred Contract Schedule shall be prepared by
Buyer and delivered to Seller on or prior to the 45th day after the date of this
Agreement and upon delivery of the final version of such schedule, such schedule
shall become a part of this Agreement as if attached hereto as of the date
hereof. In the event that the Transferred Contract Schedule includes less than
substantially all of the Contracts listed in the Seller Disclosure Letter, other
than Excluded Contracts, Seller may terminate this Agreement in accordance with
Section 11.1(g) hereof any time during the five day period immediately following
receipt of the final Transferred Contract Schedule.
(b) Notwithstanding anything to the contrary in this Agreement or any
Related Agreement, this Agreement shall not constitute an agreement to assign
any Contract which is to be an Acquired Asset or any benefit arising thereunder
or resulting therefrom, if an attempted
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assignment thereof, without the consent of a party thereto other than any member
of the Seller Group, would constitute a breach or other contravention thereof or
in any way adversely affect the rights of Buyer, or its designees, thereunder (a
"Non-Assignable Contract"). Seller shall, and shall cause each member of the
Seller Group to, use prior to the Closing all commercially reasonable efforts to
obtain the consent of the other Persons for the assignment thereof to Buyer or
its designees. If such consent is not obtained prior to the Closing, or if an
attempted assignment thereof would be ineffective or would adversely affect the
rights thereunder so that Buyer would not receive substantially all such rights,
(x) Seller shall, and shall cause each member of the Seller Group to, continue
to use all commercially reasonable efforts to obtain the consent of the other
Persons for the assignment thereof to Buyer or its designees, and (y) Seller and
Buyer shall cooperate in a mutually agreeable arrangement under which Buyer
would obtain the benefits and assume the obligations thereunder in accordance
with this Agreement, including subcontracting, sub-licensing or sub-leasing to
Buyer, or under which Seller would enforce for the benefit of Buyer, with Buyer
assuming Seller's obligations, any and all rights of Seller against a third
party thereto. Seller shall promptly pay to Buyer when received all monies
received by Seller in respect of such Non-Assignable Contracts or any benefit
arising thereunder, except to the extent the same represents an Excluded Asset.
To the extent the benefits therefrom and obligations thereunder have been
provided by alternative arrangements as provided above, any such Non-Assignable
Contract shall be deemed an Acquired Asset, provided that Buyer shall not be
responsible for any Liabilities (i) arising out of a claim of breach of such
Non-Assignable Contract due to the establishment of the alternative
arrangements, or (ii) arising out of such Non-Assignable Contract as a result of
Seller's action without Buyer's approval in a manner inconsistent with the
alternative arrangements.
(c) In furtherance, and not in limitation of the foregoing subsection
(a), in the event that Seller is unable to obtain any required consent to the
transfer at Closing to the Buyer of any Non-Assignable Contract and Seller and
Buyer have failed to agree on alternate arrangements to an assignment reasonably
satisfactory to Buyer, then (i) Seller shall remain a party to and shall
continue to be bound by such Non-Assignable Contract, (ii) Buyer shall pay,
perform and discharge fully all of the obligations of Seller thereunder from and
after the Closing Date, upon the terms and subject to the conditions of such
Non-Assignable Contract, (iii) Seller shall, without further consideration
therefor, pay, assign and remit to Buyer promptly all monies, rights and other
consideration received in respect of such Non-Assignable Contract on and after
the Closing Date, and (iv) Seller shall, without further consideration therefor,
exercise and exploit its rights and options under such Non-Assignable Contract
in the manner and only to the extent directed by Buyer. If and when any consent
shall be obtained following the Closing Date with respect to the transfer by
Seller to Buyer of any such Non-Assignable Contract or such Non-Assignable
Contract shall otherwise become assignable following the Closing Date, Seller
shall promptly assign all of its rights and obligations thereunder to Buyer,
without further consideration therefor, and Buyer shall, without further
consideration therefor, assume such rights and obligations, to the fullest
extent permitted. The existence of the provisions of this Section 6.31 shall not
reduce or otherwise adversely affect any party's ability to enforce any of its
rights under this Agreement.
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ARTICLE VII
TAX MATTERS
VII.1 Tax Representations. Seller represents and warrants to the Buyer as
-------------------
set forth below:
(a) Italian Newco, Singapore Newco, the Joint Ventures, each member of
the Operating Group and Seller (to the extent it relates to the Business or the
Acquired Assets) has (i) timely filed within the time period for filing or any
extension granted with respect thereto all applicable United States, Italian,
Singaporean, and other foreign, national, federal, state, subnational,
provincial, municipal, county and local and other Tax Returns which are required
to be filed prior to the Closing Date relating to or pertaining to any and all
Taxes attributable to, levied or imposed upon, or incurred in connection with
the Acquired Assets or the Business and all such Tax Returns are true, complete,
and correct in all material respects and (ii) paid all of the Taxes due and
payable prior to the Closing.
(b) With respect to the Acquired Assets or the Business but excluding
the effect of any check-the-box election requested by Buyer pursuant to Section
7.6, (i) there are not pending or threatened any audits, examinations,
assessments, asserted deficiencies or written claims for Taxes, (ii) there are
(and immediately after the Closing there will be) no Liens, other than Permitted
Liens, (iii) there is no reasonable basis for the assertion of any claims
relating or attributable to Seller's Taxes which would, if adversely determined,
result in a Lien on the Acquired Assets or otherwise adversely affect the
Business, (iv) none of the Acquired Assets include entities that are, were, or
will be (on or prior to the Closing Date) included in a consolidated, combined
or unitary Tax Return, and (v) none of the Acquired Assets is required to be
treated as being owned in whole or in part by another Person for Tax or other
purposes.
(c) No affirmative agreement, consent, or election for federal,
foreign, state, local, or subnational Tax purposes, or "Pioneer Status" purposes
which would adversely affect or be binding on Buyer, Singapore Newco, Italian
Newco, the Joint Ventures, or any owner or operator of the Acquired Assets or
the Business after the Closing has been filed or entered into.
(d) With respect to each of Singapore Newco, Italian Newco and the
Joint Ventures: (i) it is not a foreign sales corporation within the meaning of
Code Section 922, (ii) it is not a domestic international sales corporation
within the meaning of Code Section 992, (iii) it has not participated in a
boycott under Code Section 999 and (iv) during Seller's holding period of the
stock of such corporation, neither (x) 75% or more of the gross income of such
corporation is passive income (within the meaning of Code Section 1296(b)), nor
(y) the average percentage of assets (by value) held by such corporation which
produced passive income or which are held for the production of passive income
is at least 50%.
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(e) No Tax deficiencies, assessments or audit adjustments have been
proposed, assessed or asserted against Italian Newco, Singapore Newco, or any
member of the Seller Group (other than Seller with respect to Taxes not related
to the Business or the Acquired Assets).
(f) Neither Italian Newco, Singapore Newco nor any member of the
Seller Group (other than Seller with respect to Taxes not related to the
Business or the Acquired Assets) is delinquent in the payment of Taxes.
(g) There are no Liens for Taxes upon any of the Acquired Assets
(other than for Taxes not yet due).
(h) Except as set forth in Section 7.1(h) of Seller's Disclosure
Letter, Italian Newco, Singapore Newco, the Joint Ventures, each member of the
Operating Group and Seller (other than Seller with respect to Taxes not related
to the Business or the Acquired Assets) have not requested any extension of time
within which to file any Tax Returns in respect of any taxable period which have
not since been filed and no request for waivers of the time to assess any Taxes
are pending or outstanding.
(i) Each member of the Seller Group has complied (and until the
Closing, will comply) in all respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes (including, without
limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of the Code
or similar provisions under any foreign Laws) and have, within the time and in
the manner prescribed by Law, withheld from employee wages and paid over to the
proper governmental authorities all employment, FICA, FUTA and other Taxes and
similar amounts required to be so withheld and paid over under all applicable
laws.
(j) There are no Tax sharing, Tax indemnity or similar agreements with
respect to the Business or to which Italian Newco or Singapore Newco are a
party.
(k) Except with respect to the shares of Italian Newco, Singapore
Newco, TECH and KTI, none of the Acquired Assets consists of equity interest in
an entity.
(l) No check-the-box election has been made with respect to any entity
included in the Acquired Assets except as requested by Buyer pursuant to Section
7.6.
(m) Except as set forth in Section 7.1(m) of the Seller Disclosure
Letter, no power of attorney for Taxes has been granted with respect to the
Business or the Acquired Assets.
(n) Seller Note Purchasing Subsidiary is not described in U.S.
Treasury Regulation (S) 1.1273-2(e).
(o) Except as set forth in Section 7.1(o) of the Seller Disclosure
Letter, none of the Acquired Assets other than the stock of Singapore Newco and
Italian Newco (and the Acquired
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Assets transferred to such entities pursuant to the Reorganization) are located
outside of the United States and none of the Acquired Assets are owned by a
Person other than Seller. Section 7.1(o) of the Seller Disclosure Letter sets
forth a full and complete description of each Acquired Asset located outside of
the United States and/or owned by a Person other than Seller and identifies the
owner and location of each such Acquired Asset. Seller shall cooperate with
Buyer in structuring and implementing the tax-efficient acquisition of any
Acquired Assets located outside of the United States and/or owned by a Person
other than Seller, Italian Newco, or Singapore Newco.
VII.2 Indemnity.
---------
(a) Seller shall indemnify, defend and hold harmless, the Indemnified
Buyer Group from and against and in respect of and shall be responsible for and
shall pay or cause to be paid when due (i) any and all Taxes whensoever arising
with respect to or relating to the Acquired Assets or the Business that are
attributable to any taxable period ending on or prior to the Closing Date and,
in the case of a taxable period that includes, but does not end on the Closing
Date, the portion of such taxable period that ends on the Closing Date, (ii) any
and all Taxes of Seller, the Operating Group or Subsidiaries or Affiliates
thereof (other than Italian Newco and Singapore Newco), whensoever arising,
regardless of the period to which such Taxes relate, (iii) all Taxes arising out
of Treasury Regulation (S) 1.1502-6 or any comparable provision of foreign,
state, local or subnational Law, (iv) any and all Taxes arising out of or
constituting a breach of any representation, warranty, or covenant contained in
this Article VII or in Section 3.4, 6.1, 6.18, 6.22 or 10.6, or (v) any
clawback, disallowance, withdrawal, penalty or similar reduction or recapture of
any Tax incentive or other Governmental benefit which was authorized, provided
or awarded by any Governmental Agency prior to the Closing. (The foregoing
items (i) through (v) shall collectively be referred to herein as "Seller's
Taxes"). Seller's Taxes shall include, with respect to any taxable period
commencing before the Closing Date and ending after the Closing Date (a
"Straddle Period"), all Taxes relating to the Acquired Assets or the Business
attributable to the portion of the Straddle Period prior to and including the
Closing Date (the "Pre-Closing Period"). For any Texas ad valorem taxes the
-- -------
Straddle Period shall be the calendar year which includes the Closing Date. For
purposes of such Straddle Periods, the portion of any Tax that is attributable
to the Pre-Closing Period shall be (i) in the case of a Tax that is not based on
net income, gross income, sales, premiums or gross receipts, the total amount of
such Tax for the period in question multiplied by a fraction, the numerator of
which is the number of days in the Pre-Closing Period, and the denominator of
which is the total number of days in such Straddle Period, and (ii) in the case
of a Tax that is based on any of net income, gross income, sales, premiums or
gross receipts, the Tax that would be due with respect to the Pre-Closing Period
if such Pre-Closing Period were a separate taxable period, except that
exemptions, allowances, deductions or credits, exclusive of the amount by which
they are increased as a result of the transactions contemplated hereby, and
which are calculated on an annual basis (such as the deduction for depreciation
or capital allowances) shall be apportioned on a per diem basis. Nothing herein
shall be construed to exclude Transfer Taxes from the meaning of Seller's Taxes.
Notwithstanding anything in this Agreement to the contrary, Seller's Taxes and
Transfer Taxes shall constitute an Excluded Liability.
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(b) Buyer shall indemnify and hold harmless Seller and its affiliates
and shall be responsible for and shall timely pay or cause to be paid any and
all Taxes (other than Seller's Taxes, Transfer Taxes, Excluded Liabilities, or
any other Liability Seller is responsible for or with respect to which Seller
has agreed to indemnify Buyer Operating Group in accordance with this Agreement)
with respect to the Acquired Assets or the Business, that are attributable to
any taxable period commencing after the Closing Date and, in the case of a
taxable period that includes, but does not end on, the Closing Date, the portion
of such taxable period that begins on the day after the Closing Date ("Buyer's
Taxes"). Notwithstanding anything in this Agreement to the contrary, Buyer's
Taxes shall constitute an Assumed Liability.
(c) If Buyer or any Affiliate files any Tax Return which includes
payment of Seller's Taxes, Seller shall promptly reimburse Buyer for such
Seller's Taxes when such Tax Return is filed. If Seller files any Tax Return
which includes payments of Buyer's Taxes, Buyer shall promptly reimburse Seller
for such Buyer's Taxes when such Tax Return is filed. Seller shall timely
provide to Buyer all information and documents within the possession of Seller
(or their auditors, advisors or Affiliates) and signatures and consents
necessary for Buyer to properly prepare and file the Tax Returns described in
the second preceding sentence or in connection with the determination of any Tax
liability or any audit, examination or proceeding. Buyer shall timely provide
to Seller all information and documents within its possession or the possession
of its auditors, advisors or affiliates and signatures and consents necessary
for Seller properly to prepare and file the Tax Returns described in the second
preceding sentence or in connection with the determination of any Tax liability
or any audit, examination or proceeding. Each party hereto shall reasonably
cooperate with the other (at their own expense) party to obtain other
information or documents necessary or appropriate to prepare and file Tax
Returns or elections or necessary or appropriate in connection with the
determination of any Tax liability or any audit, examination or proceeding.
VII.3 Tax Returns.
-----------
(a) Seller shall prepare and file (or cause to be prepared and filed)
on a timely basis all Tax Returns with respect to the Business and Acquired
Assets ("Acquired Assets Tax Returns") for all taxable periods ending on or
before the Closing Date and shall pay directly when due or promptly reimburse
Buyer as provided hereunder, and shall indemnify and hold Buyer harmless against
any and all Seller's Taxes. Such Tax Returns shall be prepared in a manner
consistent with past practice and the provisions of Section 6.18 hereof. In the
event of a conflict, the provision of Section 6.18 shall control.
(b) Buyer shall prepare and file (or cause to be prepared and filed)
on a timely basis all Acquired Assets Tax Returns for periods ending after the
Closing Date and shall pay when due, and shall indemnify and hold Seller
harmless against any and all Buyer's Taxes.
VII.4 Refunds and Credits. All refunds or credits of Seller's Taxes
-------------------
(other than refunds or credits of Taxes shown on the Closing Balance Sheet)
shall be for the account of Seller. All refunds or credits of Buyer's Taxes and
Taxes shown on the Closing Balance Sheet shall be for the account
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of Buyer. Following the Closing, Buyer shall cause any such refunds or credits
due Seller pursuant to this section to be promptly forwarded to Seller after
receipt or realization thereof by Buyer, and Seller shall promptly forward (or
cause to be forwarded) to Buyer any refunds or credits due to Buyer pursuant to
this section after receipt or realization thereof by Seller.
VII.5 Termination of Tax Sharing Agreements. Seller hereby agrees and
-------------------------------------
covenants that there are and will be no obligations relating to the Acquired
Assets pursuant to any Tax sharing agreement or any similar arrangement in
effect at any time before or on the Closing Date, and any further obligations
that might otherwise have existed thereunder shall be extinguished as of the
Closing Date.
VII.6 Tax Elections. Seller shall make and/or cooperate (at its own
-------------
expense) in making such "check-the-box" and any corresponding state or local Tax
election as Buyer shall request. Without in any way limiting the foregoing,
Buyer hereby agrees to make and Seller shall cooperate in the making of an
election under Code Section 338(a) and (g) for Italian Newco and Singapore
Newco.
VII.7 Conduct of Audits and Other Procedural Matters.
----------------------------------------------
(a) Each party shall, at its own expense, control any audit or
examination by any Taxing authority, and have the right to initiate any claim
for refund or amended return, and contest, resolve and defend against any
assessment, notice of deficiency or other adjustment or proposed adjustment of
Taxes ("Tax Proceedings") for any taxable period for which that party is
obligated to file Acquired Assets Tax Returns.
(b) Each party shall promptly forward to the other in accordance with
Section 12.9 all written notifications and other written communications from any
Taxing authority received by such party or its affiliates relating to any
liability for Taxes for any taxable period for which such other party or any of
its affiliates is charged with payment or indemnification responsibility under
this Agreement and each indemnifying party shall promptly notify, and consult
with, each indemnified party as to any action it proposes to take with respect
to any liability for Taxes for which it is required to indemnify another party
or which may affect the Taxes of another party and shall not enter into any
closing agreement or final settlement with any Taxing authority with respect to
any such liability without the written consent of the indemnified or affected
parties, which consent shall not be unreasonably withheld.
(c) In the case of any Proceedings relating to any Straddle Period,
Buyer shall control such Tax Proceedings and shall consult in good faith with
Seller as to the conduct of such Tax Proceedings. Seller shall reimburse Buyer
for such portion of the costs, including legal costs, of conducting such Tax
Proceedings as is represented by the portion of the Tax with respect to such
Straddle Period for which Seller is liable pursuant to this Agreement; provided,
---------
however, that Seller may instead elect to pay or cause to be paid to Buyer the
-------
allocable amount of the applicable Taxes that constitute Seller's Taxes (which
amount shall not be less than the portion allocable to Seller
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hereunder of the Tax as asserted by the applicable Taxing authority) including
any interest, penalties, or additions thereto asserted in such proceeding. Each
party shall, at the expense of the requesting party, execute or cause to be
executed any powers of attorney or other documents reasonably requested by such
requesting party to enable it to take any and all actions such party reasonably
requests with respect to any Tax Proceedings which the requesting party
controls.
(d) The failure by a party to provide timely notice under this
subsection shall not relieve the other party from its obligations under this
Section 7.7 with respect to the subject matter of any notification not timely
forwarded, unless and to the extent that the other party can demonstrate with
clear and convincing evidence that the other party has suffered an economic
detriment because of such failure to provide notification in a timely fashion.
VII.8 Assistance and Cooperation. Each of Seller and Buyer (and their
--------------------------
respective Affiliates) shall at their own expense:
(a) assist the other party in preparing any Tax Returns which such
other party is responsible for preparing and filing in accordance with this
Article VII;
(b) cooperate fully in preparing for any audits of, or disputes with
Taxing authorities regarding, any Tax Returns relating to the Acquired Assets;
(c) make available to the other and to any Taxing authority as
reasonably requested all information, records, and documents relating to Taxes
concerning the Acquired Assets;
(d) make available to the other and to any Taxing authority as
reasonably requested employees and independent auditors to provide explanations
and additional information relating to Taxes concerning the Acquired Assets;
(e) provide timely notice to the other in writing of any pending or
threatened Tax audits, assessments or Tax Proceedings with respect to the
Acquired Assets for taxable periods for which the other may have a liability
under this Article VII;
(f) furnish the other with copies of all correspondence received from
any Taxing authority in connection with any Tax audit or Tax Proceedings with
respect to any taxable period for which the other may have a liability under
this Article VII; and
(g) retain any books and records that could reasonably be expected to
be necessary or useful in connection with Buyer's or Seller's preparation, as
the case may be, of any Tax Return, or for any audit, examination, or Proceeding
relating to Taxes. Such books and records shall be retained until the
expiration of one (1) year after the applicable statute of limitations
(including extensions thereof); provided, however, that in the event of an
audit, examination, investigation or Proceeding has been instituted prior to the
expiration of the applicable statute of limitations (or in
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the event of any claim under this Agreement), the books and records shall be
retained until there is a final determination thereof (and the time for any
appeal has expired).
VII.9 Survival. Notwithstanding anything in this Agreement to the
--------
contrary, the provisions of this Article VII shall survive for the full period
of all statutes of limitations (giving effect to any waiver, mitigation or
extension thereof).
ARTICLE VIII
EMPLOYEE MATTERS
VIII.1 Transfer of Employment.
----------------------
(a) As of the Closing Date, Italian Operating Company shall transfer
to Italian Newco the employment of all Italian Operating Company employees
employed in the Business as of the Closing Date who have neither tendered nor
received notice of their termination of employment with Italian Operating
Company as of such date, on terms substantially comparable in the aggregate to
their terms of employment as of the Closing Date. Notwithstanding the foregoing
sentence, Italian Operating Company employees employed in the Business who are
on maternity, disability or other employer-approved leave of absence as of the
Closing Date shall only have their employment transferred as of the date, if
any, upon which they return to work at Buyer's facility. From the Closing Date
until the earlier to occur of (x) completion of the Italian government's final
audit relating to the 1989 Program Contract, or (y) eighteen (18) months after
the Closing Date, Buyer shall cause employment levels in Italian Newco to remain
substantially equivalent to the level of employment as of the Closing Date;
provided, however, that Italian Newco shall be entitled to terminate Italian
-------- -------
Newco employees for good reason and shall be allowed to reduce employment levels
through Italian Newco employee attrition; provided, further, that in all events
-------- -------
Buyer shall cause Italian Newco to maintain levels of employment consistent with
the minimum requirements under the 1989 Program Contract (i.e. 1,270 employees)
during such period. Except with respect to the preceding sentence, Buyer and,
after the Closing Date, Italian Newco, shall not be required to undertake any
liability or obligation or to pay any additional consideration in order to
obtain Italian Governmental Approval of the transactions contemplated by this
Agreement.
(b) On the Closing Date, Singapore Operating Company shall transfer to
Singapore Newco the employment of all Singapore Operating Company employees
employed in the Business as of the Closing Date who have neither tendered nor
received notice of their termination of employment with Singapore Operating
Company as of such date, on terms substantially comparable in the aggregate to
their terms of employment as of the Closing Date. Notwithstanding the foregoing
sentence, Singapore Operating Company employees employed in the Business who are
on maternity, disability or other employer-approved leave of absence as of the
Closing Date shall only have their employment transferred as of the date, if
any, upon which they return to work at Buyer's facility.
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Notwithstanding this Section 8.1(b), the transfer of the employment of
the employees of Singapore Operating Company who are "employees" as defined in
the Employment Act of the Republic of Singapore (the "Employment Act") shall be
governed by Section 18A of the Employment Act. Buyer shall cause Singapore
Newco and Seller shall cause Singapore Operating Company to each comply with
their respective obligations under Section 18A.
(c) Commencing not later than thirty (30) days prior to the Closing
Date, Buyer shall, subject to the exceptions set forth in Section 8.1(e) hereof,
make written offers of employment to substantially all the Domestic Employees
and Foreign Employees (other than Excluded Employees, those employees referenced
in Sections 8.1(a) and (b) above and employees terminated pursuant to the
suspension of operations at Twinstar as contemplated by Section 6.23) who have
neither tendered nor received notice of their termination of employment with
Seller as of such date, and may make offers of employment (i) for up to forty
(40) employees employed in Seller's test equipment group, at Buyer's discretion
(which test equipment group employees shall be mutually agreed upon in good
faith by Seller and Buyer) and (ii) to Seller's employees located at, or whose
employment primarily relates to, Seller's Memory Technology Center, in each case
on terms substantially comparable in the aggregate to the terms on which Buyer
employs its employees similarly situated as of the date of the offer; provided,
--------
however, that such offers shall automatically terminate if not accepted in
-------
writing by the offerees prior to the Closing Date. Notwithstanding the
foregoing sentence, any such employees who are on maternity, disability, FMLA or
other employer-approved leave of absence as of the Closing Date shall only
commence employment with Buyer upon the date, if any, upon which they return to
work. Seller agrees to use commercially reasonable efforts to assist Buyer with
the delivery of such written offers of employment.
(d) Notwithstanding any other provision of this Agreement, Buyer will
not be required to make an offer of employment, and Buyer shall not cause
Italian Newco or Singapore Newco to make offers of employment, to any employee
employed in the Business whom Buyer and Seller mutually agree in writing prior
to the Closing Date will be retained or relocated by Seller.
(e) Notwithstanding any other provision of this Agreement, Buyer will
not be required to make an offer of employment to any employee pursuant to
Section 8.1(c) hereof, up to a maximum of 200 employees Buyer would otherwise be
required to make an offer to pursuant to Section 8.1(c) hereof, whom it
designates in writing to Seller not more than seventy-five (75) days following
the execution of this Agreement (the "Designated Employees"). Moreover, to the
extent that Buyer, in its discretion, offers employment to fewer than forty (40)
employees employed in Seller's test equipment group pursuant to Section 8.1(c)
hereof, the 200 employee limit in the preceding sentence shall be reduced. For
example, if Buyer, in its discretion, offers employment to only thirty (30)
employees in Seller's test equipment group pursuant to Section 8.1(c) hereof,
the 200 employee limit in the first sentence of this Section 8.1(e) shall be
reduced to 190 employees. Buyer agrees to reimburse Seller for fifty percent of
the termination costs pursuant to any written termination or severance plan
approved by Seller, in place and communicated to employees generally, prior to
June 1, 1998 and not put in place in anticipation of the transactions
contemplated
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hereby, arising from the termination of Designated Employees (other than
Twinstar employees) who are terminated by Seller pursuant to Section 8.1 (e) of
this Agreement.
(f) Notwithstanding anything to the contrary contained herein, Buyer
will not be required to make an offer of employment to any terminated Twinstar
employee. Buyer's failure to offer employment pursuant to the preceding
sentence shall not count against the 200 employee limit specified in Section
8.1(e) above. Buyer agrees to reimburse Seller, in accordance with Section 6.23
hereof, for fifty percent of the Shutdown Costs.
(g) Seller shall use commercially reasonable efforts to assist Buyer,
Italian Newco or Singapore Newco, as appropriate, in hiring all employees
offered employment by Buyer, or transferring employment to Italian Newco or
Singapore Newco pursuant to this Section 8.1.
(h) Prior to the Closing Date, designated employees of Buyer shall be
permitted, on a commercially reasonable basis, subject to prior written notice
to Seller, to meet with any Domestic Employee or Foreign Employee (other than
employees of Italian Operating Company or Singapore Operating Company) for
purposes of selecting the Domestic Employees or Foreign Employees to whom Buyer
will not make an offer of employment pursuant to Section 8.1(e).
(i) Notwithstanding any other provisions of this Agreement, Buyer
shall not be required to employ any Domestic Employee or Foreign Employee to
whom an offer of employment was made by Buyer pursuant to Section 8.1(c) and
accepted by such Domestic Employee or Foreign Employee on the Closing Date when
such employment would violate the terms of such employee's visa or immigration
law. In such event, Buyer agrees to employ such employee at such time, if any,
as such visa or immigration law restriction no longer applies.
VIII.2 Coverage Under Employee Benefit Plans.
-------------------------------------
(a) On the Closing Date, and thereafter while employed by Italian
Newco or Singapore Newco, each Transferred Business Employee employed by Italian
Newco or Singapore Newco ("Italian and Singapore Transferred Business
Employees") shall continue to be covered by the Employee Benefit Plans under
which they were covered immediately prior to the Closing Date that were
established, maintained and sponsored solely at the Italian and Singapore
Operating Company levels to the extent permitted by law and contract. On and
after the Closing Date, Italian and Singapore Transferred Business Employees
shall not be covered by Seller's Employee Benefit Plans, including, without
limitation, Seller's profit-sharing plan. Seller agrees to use commercially
reasonable efforts to cause Italian Operating Company and Singapore Operating
Company to transfer the Employee Benefit Plans immediately prior to the Closing
Date to Italian Newco and Singapore Newco, as appropriate, under which Italian
and Singapore Transferred Business Employees were covered (other than Seller's
Employee Benefit Plans).
(b) On the Closing Date, and thereafter while employed by the Buyer,
each Transferred Business Employee (who is a Domestic Employee and who is not an
Italian and
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Singapore Transferred Business Employees) ("Buyer Transferred Business
Employees") shall cease to be covered under Seller's Employee Benefit Plans and
instead shall become covered under Buyer's Employee Benefit Plans; provided,
--------
however, that with respect to Transferred Business Employees located in Texas
-------
("Texas Transferred Business Employees"), Buyer may elect in writing to Seller,
but not less than thirty (30) days prior to the Closing Date (the "Buyer COBRA
Election"), not to cover such employees under Buyer's group health and dental
plans and instead require Seller to offer COBRA continuation coverage to the
Texas Transferred Business Employees, with Buyer subsidizing the employees' cost
of COBRA coverage of the Texas Transferred Business Employees who elect to
receive COBRA coverage in the same dollar amount as Buyer subsidizes the premium
payments of Buyer's similarly situated U.S. employees under Buyer's group health
and dental plans. In the event Buyer elects to use the Buyer COBRA Election,
Buyer agrees to cover such Texas Transferred Business Employees as are still
employed by Buyer under Buyer's group health and dental plans no later than
January 1, 2000. Seller agrees to use commercially reasonable efforts to assist
Buyer in the transition of Buyer Transferred Business Employees to coverage
under Buyer's Employee Benefit Plans including, at Buyer's request, allowing
Buyer to hold, on a commercially reasonable basis, Employee Benefit Plan open
enrollment meetings with potential Transferred Business Employees at least
thirty (30) days prior to the Target Closing Date on Seller's premises.
(c) At Buyer's written request prior to the Closing Date, Seller
agrees to cause Texins' Association to extend membership privileges to Texas
Transferred Business Employees for such period of time (up to a maximum of one
(1) year following the Closing Date or until Texins' Association ceases to offer
recreation facilities to Seller's employees, whichever is earlier) as is
specified in writing by Buyer; provided, however, that Seller shall not
subsidize the Texins' Association membership costs of Texas Transferred Business
Employees on and after the Closing Date.
(d) Seller shall provide or cause to be provided to Transferred
Business Employees all notices required to be provided under the Law, including,
without limitation, the Health Insurance Portability and Accountability Act of
1996 ("HIPAA") in connection with the termination of U.S.-based Transferred
Business Employees' coverage under Seller's Employee Benefit Plans.
VIII.3 General Matters.
---------------
(a) Buyer, Italian Newco and Singapore Newco, as appropriate, shall
credit each Transferred Business Employee with all service with Seller and its
Affiliates prior to the Closing Date and with all amounts paid to each such
Transferred Business Employee prior to the Closing Date to the extent that
service or pay is relevant under any Employee Benefit Plan of Buyer, Italian
Newco or Singapore Newco for purposes of determining eligibility to participate,
vesting and benefit accrual. Buyer shall also provide Transferred Business
Employees with credit under Buyer's Employee Benefit Plans for deductible and
co-payment amounts made by Transferred Business Employees under Seller's
Employee Benefit Plans prior to the Closing Date in the plan years in which the
Closing Date occurs. Seller agrees to provide deductible and co-payment
information with
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respect to the Transferred Business Employees as soon as is practicable
following the Closing Date to effectuate such crediting of deductibles and co-
payment amounts. Seller agrees to provide Buyer with service commencement date
and prior compensation information with respect to each potential Transferred
Business Employee as soon as practicable after the date upon which this
Agreement is executed.
(b) Commencing with the date upon which this Agreement is executed,
Seller and Buyer agree to cooperate fully with respect to the employment-related
actions which are necessary or reasonably desirable to accomplish the
transactions contemplated pursuant to this Agreement, including the provision of
records and information as each may reasonably request (including job titles,
short and long-term disability coverage, life insurance coverage, operator
certification and workers' compensation records and information) and the making
of all appropriate filings under the Law.
VIII.4 Employee Tax Withholding and Reporting. With respect to
--------------------------------------
Transferred Business Employees who are required to be furnished a Form W-2 for
the calendar year in which the Closing Date occurs, Buyer and Seller agree to
follow the "standard procedure" set forth in Revenue Procedure 96-60 with
respect to discharging their respective income and employment tax withholding
and reporting obligations with respect to such employees.
VIII.5 Other Employment Matters.
------------------------
(a) Prior to the Closing Date, or as promptly as practicable
thereafter, Seller or a Subsidiary of Seller, as appropriate, shall pay to the
Transferred Business Employees all salary, overtime, bonuses, severance and
commissions and other remuneration earned, accrued and payable for all periods
up to the Closing Date; provided, however, that paid time off accruals shall not
-------- -------
be paid out by Seller or Twinstar (but only with the written consent of Twinstar
Business Employees) at the Closing Date, but instead shall be credited to each
Transferred Business Employee by Buyer.
(b) Seller or its Subsidiaries, as appropriate, shall comply with all
notice and other provisions of applicable Laws, including (without limitation)
the Worker Adjustment and Retraining Notification Act (the "Warn Act") and
COBRA. Seller shall retain all liability for salary, bonuses, commissions and
benefits due Domestic Employees and Foreign Employees and related Taxes of the
Seller Group for periods after the date of such notice of termination as well as
for any obligations under the Warn Act and for providing continuation coverage
under COBRA or any applicable similar Laws.
(c) Seller agrees to permit Transferred Business Employees who are
participants in Seller's (or Twinstar's) cafeteria (Code Section 125) plan
immediately prior to the Closing Date to continue participation in such plans
through the end of the plan year in which the Closing Date occurs (the
"Transition Plan Year"). Such participation shall include the right of such
Transferred Business Employees to receive reimbursements pursuant to the medical
expense reimbursement component of Seller's cafeteria plan for all qualifying
expenses incurred in the Transition Plan Year,
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including after the Closing Date, up to the annual election amount made by each
such participant with respect to the Transition Plan Year. Such Transferred
Business Employees shall not be required to make any additional salary or wage
deferrals or other payments to Seller's cafeteria plan other than regularly
scheduled salary or wage deferrals made while on Seller's payroll.
(d) Seller, Italian Operating Company and Singapore Operating Company
agree, that with respect to any Transferred Business Employee whom had commenced
attending an educational course prior to the Closing Date that would have been
eligible for coverage pursuant to the education expense reimbursement plans of
Seller, Italian Operating Company or Singapore Operating Company, Seller shall
continue to cover such Transferred Business Employees under such plans and
provide benefits thereunder with respect to such courses pursuant to the terms
and conditions of such plans as if such employees had remained employed by
Seller, Italian Operating Company or Singapore Operating Company, as
appropriate.
ARTICLE IX
CONDITIONS PRECEDENT TO CLOSING
IX.1 Conditions Precedent to Obligations of Buyer and Seller. The
-------------------------------------------------------
respective obligation of each party hereto to effect the Closing shall be
subject to the satisfaction on or prior to the Closing Date of the following
conditions:
(a) Regulatory Approvals. All material approvals of all Governmental
--------------------
Agencies (including compliance with the requirements under the HSR Act and the
European Union authorities) required to consummate the transactions contemplated
hereby (including, without limitation, the transfer to Buyer, or its designees,
of the Acquired Assets and the assumption by Buyer, or its designees, of the
Assumed Liabilities) shall have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect thereof shall have expired
(all such approvals and the expiration of all such waiting periods being
referred to herein as the "Requisite Regulatory Approvals").
(b) No Injunction or Restraints; Illegality. No order, injunction or
---------------------------------------
decree issued by any Governmental Agency of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the transactions
contemplated hereby (including, without limitation, the transfer to Buyer, or
its designees, of the Acquired Assets and the assumption by Buyer, or its
designees, of the Assumed Liabilities) shall be in effect. No Law shall have
been enacted, entered, promulgated or enforced by any Governmental Agency which
prohibits, restricts or makes illegal consummation of the transactions
contemplated hereby (including, without limitation, the transfer to Buyer, or
its designees, of the Acquired Assets and the assumption by Buyer, or its
designees, of the Assumed Liabilities).
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(c) Certain Consents; Amendments. The amendments, modifications,
----------------------------
consents and agreements (including without limitation the JV Amendments) in form
and substance mutually satisfactory to Buyer and Seller substantially in
accordance with the terms agreed to pursuant to Section 6.12 hereof shall have
been entered into or obtained and shall be in full force and effect.
IX.2 Conditions Precedent to Obligations of Buyer. The obligation of Buyer
--------------------------------------------
to effect the Closing is also subject to the satisfaction or waiver by Buyer on
or prior to the Closing Date of the following conditions:
(a) Representations and Warranties; Covenants.
-----------------------------------------
(i) The representations and warranties of Seller set forth in this
Agreement shall be true and correct in all respects as of the date hereof and as
of the Closing Date as if made at and as of such date (without regard to
qualification as to materiality) with only such exceptions as would not in the
aggregate have or reasonably be expected to have a Material Adverse Effect
(disregarding for these purposes, any such exceptions resulting from a change in
the Memory Products industry generally or in the economy generally).
(ii) Seller shall have performed and complied with in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by Seller prior to or at the Closing.
(b) JV Amendments. Buyer shall have received duly executed copies of
-------------
each of the JV Amendments all of which shall be in full force and effect.
(c) Transition Services Agreement. The Transition Services Agreement
-----------------------------
shall have been duly executed and delivered by Seller and shall be in full force
and effect.
(d) Securities Rights and Restrictions Agreement. The Securities
--------------------------------------------
Rights and Restrictions Agreement shall have been duly executed and delivered by
Seller and shall be in full force and effect.
(e) Cross-License Agreement. The Cross-License Agreement shall have
-----------------------
been duly executed and delivered by Seller and shall be in full force and
effect.
(f) Third Party Consents. The consent, approval or waiver of each
--------------------
Person (other than the Requisite Regulatory Approvals) whose consent or approval
shall be required in order to consummate the transactions contemplated hereby
shall have been obtained, except where the failure to obtain any such consent,
approval or waiver, individually or in the aggregate, would not have a Material
Adverse Effect.
(g) Financing. Buyer shall have obtained $400 million of financing
---------
from third parties on terms and conditions satisfactory to Buyer in its sole
discretion; provided, however, that
-------- -------
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this condition shall be deemed to have been fulfilled on the date fifteen (15)
days after receipt by Buyer of the audited financial statements and March 31,
1998 unaudited financial statements required to be delivered by Seller to Buyer
pursuant to Section 6.9 hereof.
(h) Lien Release. Buyer shall have received duly executed copies of
------------
all agreements, instruments, certificates and other documents necessary or
appropriate, in the opinion of counsel to Buyer, to release any and all material
Liens (except Permitted Liens) against the Acquired Assets.
(i) Material Adverse Change. No material adverse change shall have
-----------------------
occurred in the Business since the date hereof (other than a material adverse
change in the Memory Products industry or in the economy generally).
(j) Reorganization. The Reorganization shall have occurred in
--------------
accordance with the provisions of Sections 6.1 and 6.6 hereof.
(k) Delivery Obligations. Seller shall have fulfilled all of its
--------------------
delivery obligations set forth in Section 3.2 hereof.
IX.3 Conditions Precedent to Obligations of Seller. The obligation of
---------------------------------------------
Seller to effect the Closing is also subject to the satisfaction or waiver by
Seller on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties; Covenants.
-----------------------------------------
(i) The representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all respects as of the date hereof and as
of the Closing Date as if made as of such date (without regard to qualification
as to materiality) with only such exceptions as would not in the aggregate have
or reasonably be expected to have a Material Adverse Effect (disregarding for
these purposes, any such exceptions resulting from a change in the Memory
Products industry generally or in the economy generally).
(ii) Buyer shall have performed and complied with in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Buyer prior to the Closing.
(b) JV Amendments. Seller shall have received duly executed copies of
-------------
each of the JV Amendments all of which shall be in full force and effect.
(c) Transition Services Agreement. The Transition Services Agreement
-----------------------------
shall have been duly executed and delivered by Buyer and shall be in full force
and effect.
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(d) Securities Rights and Restrictions Agreement. The Securities
--------------------------------------------
Rights and Restrictions Agreement shall have been duly executed and delivered by
Buyer and shall be in full force and effect.
(e) Cross-License Agreement. The Cross-License Agreement shall have
-----------------------
been duly executed and delivered by Buyer and shall be in full force and effect.
(f) Delivery Obligations. Buyer shall have fulfilled all of its
--------------------
delivery obligations set forth in Section 3.3 hereof.
ARTICLE X
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
X.1 Survival of Representations; Effect of Breach. The representations
---------------------------------------------
and warranties made by the parties to this Agreement shall survive the execution
and delivery hereof for a period commencing on the date hereof and ending on the
second anniversary of the Closing Date; provided, however, that (i) the
-------- -------
representations and warranties of Seller in Article VII (Tax Matters) shall
survive until the expiration of the applicable statute of limitations, and (ii)
the representations and warranties of Seller set forth in Section 4.1(o) and
4.2(n) shall survive the execution and delivery hereof indefinitely. The
covenants and agreements in this Agreement shall survive except to the extent
they are specifically limited by their terms.
X.2 Seller's Agreement to Indemnify.
-------------------------------
(a) Subject to the terms and conditions of this Article X, Seller
agrees to indemnify, defend and hold harmless, each member of the Buyer
Operating Group, and the officers, directors, employees and agents, and
successors and assigns of each of them (collectively, the "Indemnified Buyer
Group"), from and against, for, and in respect of any and all Claims and Losses
asserted against, arising out of, relating to, imposed upon or incurred by any
member of the Indemnified Buyer Group, directly or indirectly, by reason of or
resulting from (i) any inaccuracy in or breach by Seller of its representations
or warranties contained in Section 4.1(e) of this Agreement, (ii) any inaccuracy
in or breach by Seller of its other representations or warranties contained in
this Agreement, (iii) any breach by Seller of its obligations, covenants or
agreements under this Agreement, (iv) Seller's failure to comply with any
applicable bulk sales laws, (v) any Excluded Liabilities, (vi) the failure of
Seller to obtain consents, Permits and/or Approvals required to transfer
Contracts, Permits and/or Approvals and similar items in each case constituting
the Acquired Assets to Buyer or (vii) any allegation that the conduct, practices
or products made, used or sold, by the Business at any time prior to the Closing
misappropriates or infringes any Intellectual Property of any Person
(collectively "Buyer Indemnified Claims").
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(b) Notwithstanding anything to the contrary in Section 10.2(a) above
but subject to Section 10.2(c) below, (i) Seller shall not be liable for Buyer
Indemnified Claims arising under subsection 10.2(a)(ii), (iv), (vi) and (vii)
unless (A) the amount of such claim either individually, or together with any
related claims, equals or exceeds $25,000 and (B) the aggregate of all Buyer
Indemnified Claims exceeds U.S. $5 million (the "Threshold Amount"); provided,
--------
however, that when such claims equal or exceed the Threshold Amount, Seller
-------
shall be liable for, and provide indemnification with respect to, the full
amount of all such claims, and (ii) Seller shall not be liable for Buyer
Indemnified Claims arising under Section 10.2(a)(ii), (iv), (v), (vi) and (vii)
exceeding in the aggregate U.S. $636 million (the "Maximum Amount").
(c) Notwithstanding anything to the contrary contained in Sections
10.2(a) and (b) above, (i) in no event shall Buyer Indemnified Claims (A)
arising under Sections 10.2(a)(i), (B) 10.2(a)(iii) to the extent that any such
breach relates to a breach of an agreement to make any payment or reimbursement
in accordance with the terms of the Agreement, or (C) otherwise arising out of,
relating to, imposed upon, or incurred by reason of or resulting from the
Excluded Liabilities set forth in Exhibit J attached hereto be subject to the
Maximum Amount or taken into account in determining the amount of Losses subject
to the Maximum Amount, and (ii) in no event shall Buyer Indemnified Claims
arising under Section 10.2(a)(i) be subject to the provisions of Section
10.2(b).
X.3 Tax Indemnity. Notwithstanding anything to the contrary in this
-------------
Article X, Seller's obligation to indemnify Buyer with respect to the Tax
matters covered by Article VII shall not be limited by this Article X.
X.4 Buyer's Agreement to Indemnify.
------------------------------
(a) Subject to the terms and conditions of this Article X, Buyer
agrees to indemnify, defend and hold harmless, Seller and each member of the
Operating Group, and the officers, directors, employees and agents, and
successors and assigns of each of them (collectively, the "Indemnified Seller
Group"), from and against, for, and in respect of any and all Claims and Losses
asserted against, arising out of, relating to, imposed upon or incurred by any
member of the Indemnified Seller Group, directly or indirectly, by reason of or
resulting from (i) any Assumed Liabilities or (ii) any inaccuracy in or a breach
by Buyer of any of its representations, warranties, covenants or agreements
contained in this Agreement (collectively "Seller Indemnified Claims" and,
together with Buyer Indemnified Claims.
(b) Notwithstanding anything to the contrary in Section 10.4(a) but
subject to Section 10.4(c) below, (i) Buyer shall not be liable for Seller
Indemnified Claims arising under subsection 10.4(a)(ii) unless (A) the amount of
such claim either individually, or together with any related claims, equals or
exceeds $25,000 and (B) the aggregate of all Seller Indemnified Claims exceeds
the Threshold Amount; provided, however, that when such claims equal or exceed
-------- -------
the Threshold Amount, Buyer shall be liable for, and provide indemnification
with respect to, the full amount of all such claims and (ii) Buyer shall not be
liable for Seller Indemnified Claims arising under Section 10.4(a) (ii)
exceeding in the aggregate U.S. $75 million.
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(c) Notwithstanding anything to the contrary in Section 10.4(a) and
(b) above, in no event shall Seller Indemnified Claims arising under Section
10.4(a)(i) be subject to the provision of Section 10.4(b).
X.5 Notice of Claims; Contest of Claims. If any indemnified party has
-----------------------------------
paid or properly accrued or reasonably anticipates that it will have to pay or
accrue an Indemnified Claim, such indemnified party shall so notify the
indemnifying party; provided, however, that its failure to do so shall not
-------- -------
relieve the indemnified party's obligations except to the extent of any material
prejudice caused thereby. The notice shall describe such an Indemnified Claim,
the amount thereof, if known, and the method of computation thereof, all with
reasonable particularity and shall contain a reference to the provisions of this
Agreement in respect of which such an Indemnified Claim shall have been
incurred, and, in the case of an action or suit by a third party, shall include
a copy of all documents received by the indemnified party in connection
therewith and any other information known to the indemnified party with respect
to such action or suit or the basis therefor. Such notice shall be given
promptly after the indemnified party becomes aware of each such an Indemnified
Claim, action or suit. The indemnifying party shall, within thirty (30) days
after receipt of such notice of an Indemnified Claim (i) pay or cause to be paid
to the indemnified party the amount of an Indemnified Claim specified in such
notice which the indemnifying party does not contest, or (ii) notify the
indemnified party if it wishes to contest the existence or amount of part or all
of such an Indemnified Claim stating with particularity the basis upon which it
contests the existence or amount thereof. The indemnifying party shall, within
thirty (30) days after receipt of each notice with respect to an action or suit
demanding indemnification of a suit by a third party, undertake to defend such
action. If the indemnifying party fails to so undertake the defense in a
reasonable manner, the indemnified party shall have the right to defend,
contest, settle or compromise such action or suit, and the indemnifying party
shall, upon request from such indemnified party, promptly pay to such
indemnified party in accordance with the other terms of this Article X, the
amount of any Loss resulting from its liability to the third party claimant. In
any action or suit by a third party limited to a claim for money damages, the
indemnifying party shall have the right to undertake, conduct and control,
through counsel (reasonably acceptable to the indemnified party) and at the sole
expense of such indemnifying party, the conduct and settlement of such action or
suit, and such indemnified party shall cooperate with such indemnifying party in
connection therewith; provided, however, that, the indemnifying party may not,
-------- -------
in the defense or prosecution of any such action or suit, except with the prior
written consent of the indemnified party, consent to the entry of any judgment
or enter into any settlement (i) which does not include as an unconditional term
thereof the giving to such indemnified party by the third party of a full and
final release from all liability in respect of such action or suit or (ii) which
shall limit, restrict or otherwise affect the indemnified party to carry on or
conduct its business (then or in the future), or require any payment to be made
by the indemnified party, or limit, restrict, or otherwise adversely affect the
manner in which the indemnified party carries on or conducts its businesses
(then or in the future).
X.6 Treatment of Indemnities. Any indemnity payments made pursuant to
------------------------
this Agreement shall be treated for income tax purposes as an adjustment of the
purchase price to the extent permitted by Law. If applicable, the amount an
indemnifying party shall pay to the
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indemnified party with respect to an obligation for indemnification under this
Article X shall be an amount which equals the amount of such obligation of the
indemnifying party, after giving effect to any and all Taxes imposed on the
indemnified party on the receipt or accrual of such indemnification as a result
of a Taxing authority not treating such amount as an adjustment to the purchase
price.
X.7 Risk of Loss. Risk of loss with regard to any of the Acquired Assets
------------
shall be on Seller until the Closing. Risk of loss of the Excluded Assets shall
remain with Seller.
X.8 Indemnity Payments. All indemnity payments under this Agreement shall
------------------
be payable in United States dollars. If any Indemnified Claims are incurred in
a currency other than United States dollars, then the United States dollar
amount thereof shall be calculated as follows: if any Indemnified Claims are
incurred as a result of an event occurring on a determinable date, the amount of
Indemnified Claims shall be deemed to be the amount of United States dollars
required to purchase the amount of such other currency on the date of such event
(or, if such date is not a Business Day, the next succeeding Business Day) from
Bank of America in San Francisco, and (z) in the case of any other Indemnified
Claims, an amount equal to the amount of United States dollars that would have
been necessary for the indemnified party to purchase the foreign currency
necessary to pay such Indemnified Claims as they were incurred.
X.9 Seller's Duty to Complete Remedial Activities.
---------------------------------------------
(a) Subject to Section 10.9(d), Seller acknowledges that its
obligation to provide indemnification pursuant to Section 10.2 may result in a
duty to promptly and diligently undertake and perform, upon demand by certain
members of the Indemnified Buyer Group, any Remedial Activities covered by the
indemnification obligation and required by applicable Environmental Requirements
and good business practices customarily adhered to by major U.S. corporations
doing business in the countries in which the Acquired Facilities are located,
and that such Remedial Activities may appropriately include Remedial Activities
to prevent Contamination and other potential property damage and bodily injury,
which may be caused thereby, migration to date, future releases, leaks, spills
and emission and/or as well as Remedial Activities to remove, remediate, and
eliminate existing Contamination giving rise to Seller's indemnification
obligations and other harmful Hazardous Material conditions giving rise to
Seller's indemnification obligations. In this regard, Seller specifically
agrees to promptly, following written demand, commence and thereafter diligently
complete all such Remedial Activities giving rise to Seller's indemnification
obligations within a reasonable time, and in any event, within the time
permitted by applicable Environmental Requirements. Seller acknowledges that
monetary damages are not adequate to compensate the Indemnified Buyer Group for
Seller's failure to promptly undertake and complete such Remedial Activities
giving rise to Seller's indemnification obligations and, accordingly, Seller
acknowledges and agrees that its obligation to perform such Remedial Activities
may be specifically enforced by a suit brought in the State of Delaware for all
Remedial Activities required of Seller hereunder, without regard to the location
(whether within or without the U.S.) where the Remedial Activities must actually
be performed.
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(b) Subject to Section 10.9(d), without limiting other rights and
remedies hereunder, the Indemnified Buyer Group, and each of them, who is an
owner or occupant of an Acquired Facility at which Remedial Activities which
Seller is required by this Agreement to perform will be performed (the "Facility
Indemnitees"), at their election, may elect to either: (i) perform (or cause
their designee to perform) such Remedial Activities with funds provided by
Seller, or (ii) require that Seller, at their sole cost, perform such Remedial
Activities. If a Facility Indemnitee elects to so perform the Remedial
Activities (or to cause a designee to perform the Remedial Activities) as
permitted above, then within forty-five (45) days following delivery of written
demand to Seller, Seller shall pay to such the Facility Indemnitee the costs and
expenses reasonably incurred by the Facility Indemnitee with respect to such
Remedial Activities, with interest thereon (if not paid within such time) at the
rate of fifteen percent (15%) per annum from the date of the expenditure until
paid, if such sums are not paid within forty-five (45) days following submission
to Seller of the demand and reasonable documentation of the amount owing. In no
event, however, shall the principal sums payable by Seller to the Facility
Indemnitee pursuant to this subparagraph exceed the sums that reasonably would
have been incurred by Seller had Seller been the party performing such Remedial
Activities. In either event, upon demand, Seller shall make such applications,
take such actions and execute such documents as may be required to make a member
of Seller the "generator," responsible for any Hazardous Material waste created
by the performance of such Remedial Activity.
(c) Subject to Section 10.9(d), Seller shall promptly and diligently
undertake and complete Remedial Activity required to be performed by Seller
under this Agreement in a good and workmanlike manner and in compliance with
this Agreement and all applicable Environmental Requirements and other Laws.
All such Remedial Activities shall be performed only after obtaining the
Facility Indemnitees' prior written approval (which shall not be unreasonably
withheld or delayed) of all material matters relating to said activity,
including, without limitation, (i) the identity of all environmental
consultants, contractors and other Persons performing the work, (ii) the plans
and specifications for the work, (iii) the time and manner for the performance
of the work, (iv) the precautions to be undertaken to protect the site where the
work will be performed, and the other activities being conducted thereon, from
damage or unreasonable interference, (v) the existence of appropriate
warranties, bonds and insurance with respect to the work and the contractors
performing the work, (vi) the source of payment for the work, (vii) the choice
of any treatment system, pre-treatment system or other major installations and
technologies that will be utilized, and (viii) the cleanup goals and other major
condition that must be met before such work is deemed complete. During the
conduct of a Remedial Activity, Seller shall give the Buyer and any Facility
Indemnitees at least three (3) days prior written notice of all material
meetings and conferences between Seller and/or its Agents on the one hand and
any Governmental Agency or any third party claimant for such work, on the other
hand, and shall permit the Buyer and the Facility Indemnitee(s) (or their
respective designee(s)) to participate in all such meetings and conferences. No
Seller Group member, or anyone under their control shall deliver any report,
sampling results, remedial investigation, feasibility study, recommendations,
correspondence (other than purely ministerial correspondence) or other documents
or proposals concerning an Acquired Facility to any such
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Governmental Agency or third party with respect to Remedial Activity required by
this Agreement, without the consent of Buyer and any relevant Facility
Indemnitees, which consent shall not be unreasonably withheld or delayed and the
Seller Group shall promptly give Buyer and such Facility Indemnitee(s) copies of
all plans, specifications, contracts, reports, warranties, and other writings
prepared in connection with any Remedial Activity required of the Seller Group
by this Agreement.
(d) Notwithstanding anything contained in this Section 10.9 to the
contrary, the foregoing provisions regarding the performance and completion of
certain Remedial Activities shall apply only to Remedial Activities to be
conducted at Acquired Facilities designated in Section 1.5 of the Seller
Disclosure Letter as "primary facilities" and shall not apply to the other
Acquired Facilities; provided, however, that such limitation of the rights and
-------- -------
obligations of the parties pursuant to this sentence shall not modify the
parties' rights and obligations with respect to Buyer Indemnified Claims or
Seller Indemnified Claims under any other provision of this Agreement.
X.10 Seller's Duty With Respect to Intellectual Property. If, at any time
---------------------------------------------------
prior to the third anniversary of the Closing any Person brings or threatens to
bring, any claim or action against Buyer or any of its Affiliates or any
successor to Buyer or any of its Affiliates, alleging that the conduct of, or
any product made or sold by, the Business infringes or misappropriates the
Intellectual Property of such Person and such conduct or product is
substantially the same as the conduct or products, as the case may be, of the
Business prior to the Closing, then regardless of whether such claim would be
subject to any indemnity under this Article X, Seller shall, at Seller's
expense, cooperate in a reasonable manner with, and assist, Buyer or any of its
Affiliates in the defense of such claim or action, including by making available
to Buyer or any of its Affiliates (any documents, materials or information
relevant to Buyer's) or any of its Affiliates' defense of such action, claim or
potential claim; provided, however, that Seller shall not have any obligation to
provide information covered by attorney-client privilege.
X.11 Waivers and Survival. It is expressly acknowledged by each member of
--------------------
the Seller Group and Buyer that the obligations of the parties under Sections
10.2 and 10.4 are independent of all other promises made by the parties in this
Agreement or otherwise and are intended to allocate risk of loss with respect to
the matters covered by such provisions solely to the indemnitors therein
identified, without regard to the conduct of any person or any other fact or
circumstance. Therefore the parties further agree that the acts and omissions
of any indemnitee identified in Section 10.2 or 10.4 or any other Person
(whether active, passive, negligent, wrongful, in violation of this Agreement or
any other agreement) shall not impair the right of the indemnitees benefitted by
said Sections to enforce the obligations of the indemnitors thereunder. The
obligations and rights of said indemnitees are in addition to, independent from,
and severable from the rights and obligations of the parties under this
Agreement and shall survive, notwithstanding the termination, expiration or
breach of this Agreement, any Related Agreement, or any other Contract between
any of the parties hereto and notwithstanding any other act or omission of any
Person, whether or not such acts are in violation of the express provisions of
this Agreement. The provisions of this Article X shall survive the Closing and
any subsequent sale, transfer, assignment, or hypothecation of any Acquired
Asset, Newco Asset, Joint Venture Asset or any interest in an indemnitee to any
Person.
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ARTICLE XI
TERMINATION
XI.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing as provided below:
(a) Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to Closing;
(b) This Agreement may be terminated by Buyer any time within the
five-day period beginning forty-five (45) days after the date hereof by giving
written notice to Seller during such period, if Buyer shall not have obtained,
investigated and approved in its sole discretion such reports and information
concerning the Joint Ventures, including the Intellectual Property, accounting,
financial, environmental, employee and legal affairs of the business of the
Joint Ventures;
(c) This Agreement may be terminated by (i) either Buyer, if there has
been a material breach of any representation, warranty, covenant or agreement on
the part of Seller, which has not been cured within thirty (30) days following
receipt by Seller of notice of such breach, or Seller if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of Buyer, which breach has not been cured within thirty (30) days following
receipt by Buyer of notice of such breach, or (ii) either Buyer or Seller, if
any permanent injunction or other order of a court or other competent authority
preventing the consummation of the transactions contemplated by this Agreement
shall have become final and nonappealable;
(d) Buyer or Seller may terminate this Agreement if the Closing shall
not have occurred on or before November 30, 1998; provided that the right to
terminate this Agreement under this Section 11.1(d) shall not be available to
(x) Buyer, if such party has breached any of its representations, warranties or
covenants hereunder in any material respect and such breach has been the cause
of or resulted in the failure of the Closing to occur on or before such date or
(y) Seller, if such party has breached any of its representations, warranties or
covenants hereunder in any material respect and such breach has been the cause
of or resulted in the failure of the Closing to occur on or before such date;
(e) This Agreement may be terminated by (i) Buyer within twenty (20)
days after the later of the date on which Buyer receives the Seller Disclosure
Letter and 30 days from the date hereof by delivery to Seller of written
Disclosure Objection notice, or (ii) Seller within twenty (20) days after the
later of the date on which Seller receives the Buyer Disclosure Letter and
thirty (30) days from the date hereof by delivery to Buyer of written Disclosure
Objection notice;
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(f) Buyer or Seller may terminate this Agreement anytime within the
five-day period beginning forty-five (45) days after the date hereof by giving
written notice to the other party during such five-day period if the parties
hereto have not agreed (i) on the terms and conditions of the JV Amendments and
related matters contemplated by Section 6.12 hereof, or (ii) on the terms and
conditions of the agreements and related matters with respect to Italian
Operating Company as contemplated by Section 6.6 hereof; or
(g) Seller may terminate the Agreement any time during the five day
period commencing with delivery by Buyer to Seller of the final Transferred
Contract Schedule by giving written notice to Buyer, in the event such schedule
lists less than substantially all the Contracts disclosed in the Seller
Disclosure Letter (other than Excluded Contracts).
XI.2 Effect of Termination. In the event of the termination of this
---------------------
Agreement by either Buyer or Seller as provided in Section 11.1, this Agreement
shall forthwith become void and there shall be no Liability or obligation on the
part of any party hereto or any of its respective Affiliates, officers,
directors or shareholders except to the extent that such termination results
from any intentional or knowing breach by a party hereto of any of its
representations or warranties, or of any of its covenants or agreements, in each
case, as set forth in this Agreement.
XI.3 Further Provisions. Termination by either party in accordance with
------------------
any provision of Section 11.1 shall be effective immediately upon the giving of
notice thereof.
ARTICLE XII
MISCELLANEOUS
XII.1 Further Assurances. From time to time hereafter, Buyer and Seller
------------------
shall execute and deliver such other instruments of transfer and assumption and
take such further action, including providing access to necessary books and
records as the other may reasonably request to carry out the transfer of the
Acquired Assets and as otherwise may be reasonably required in connection with
effecting or carrying out the provisions of this Agreement.
XII.2 Specific Performance. Each of the parties hereto acknowledges and
--------------------
agrees that the other party hereto would be irreparably damaged in the event any
of the provisions of this Agreement were not performed in all material respects
in accordance with their specific terms or were otherwise breached.
Accordingly, each of the parties hereto agrees that they each shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provision hereof in any action instituted in any foreign or domestic court
having subject matter jurisdiction, to the extent permitted by applicable law.
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XII.3 No Waiver. Except as expressly provided in this Agreement, nothing
---------
contained in this Agreement shall cause the failure of either party to insist
upon strict compliance with any covenant, obligation, condition or agreement
contained herein to operate as a waiver of, or estoppel with respect to, any
such or any other covenant, obligations, condition or agreement by the party
entitled to the benefit thereto.
XII.4 Severability. If any provisions hereby shall be held invalid or
------------
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and,
subject to applicable Law, shall not affect the validity or effect of any other
provisions hereof.
XII.5 No Third Party Beneficiary. Nothing herein, expressed or implied, is
--------------------------
intended to or shall be construed to confer upon or give to any Person other
than the parties hereto and their successors or permitted assigns any rights or
remedies under or by reason of this Agreement.
XII.6 Entire Agreement; Amendments. This Agreement and the Related
----------------------------
Agreements are intended as a complete statement of the entire agreement and
understanding between the parties with respect to the subject matter hereof and
thereof and supersede all prior statements, representations, discussions,
agreements, draft agreements and undertakings, whether written or oral, express
or implied, of any and every nature with respect thereto. This Agreement may
only be amended by written agreement of the parties hereto.
XII.7 Assignment. No party may assign any of its rights or delegate any of
----------
its duties under this Agreement without the consent of the other party or
parties hereto, provided that Buyer may assign some or all of its rights
hereunder to one or more wholly owned Subsidiaries of Buyer without being
required to obtain any such consent.
XII.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO
PRINCIPLES GOVERNING CONFLICTS OF LAW.
XII.9 Notices. All notices, requests, demands, and other communications
-------
under this Agreement shall be in writing and shall be delivered personally
(including by courier) or given by facsimile transmission to the parties at the
following addresses (or to such other address as a party may have specified by
notice given to the other pursuant to this provision) and shall be deemed given
when so received:
(i) if to Buyer, to:
Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83716-9632
Telephone: (208) 368-4517
Facsimile: (208) 368-4540
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<PAGE>
Attention: Roderic W. Lewis, Esq.
General Counsel
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Telephone: (650) 493-9300
Facsimile: (650) 493-6811
Attention: John A. Fore, Esq.
(ii) if to Seller, to:
Texas Instruments Incorporated
8505 Forest Lane
MS 8658
Dallas, Texas 75243
Telephone: (972) 480-5050
Facsimile: (972) 480-5061
Attention: Richard J. Agnich, Esq.
General Counsel
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4277
Facsimile: (212) 450-4800
Attention: Paul R. Kingsley, Esq.
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a Business Day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding Business Day in the place of receipt.
XII.10 Fees and Expenses. Except as otherwise set forth herein or in any of
-----------------
the Related Agreements, all costs and expenses, including all fees and expenses
of attorneys, investment bankers,
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lenders, financial advisors and accountants, in connection with the
negotiations, preparation, execution and delivery of this Agreement, the
Related Agreements and the consummation of the transactions contemplated hereby
and thereby, and any governmental or regulatory filings, including any required
filings under the HSR Act or with respect to the European Union, shall be paid
by the party incurring such costs and expenses.
XII.11 Table of Contents; Headings; Schedules. The table of contents and
--------------------------------------
section headings of this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this Agreement. All
references herein to Articles, Sections, Schedules and Exhibits, unless
otherwise identified, are to Articles and Sections of, and Schedules and
Exhibits to, this Agreement.
XII.12 Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received a counterpart
hereof signed by the other party hereto.
XII.13 Publicity. So long as this Agreement is in effect, Buyer and Seller
---------
shall promptly advise, consult and cooperate with the other prior to issuing, or
permitting any of its Subsidiaries, directors, officers, employees or Agents to
issue, any press release or other statement to the press or any third party with
respect to this Agreement, or the transactions contemplated hereby.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
MICRON TECHNOLOGY, INC.
By: /s/ Steven R. Appleton
---------------------------
Name:
Title:
TEXAS INSTRUMENTS INCORPORATED
By: /s/ Thomas J. Engibous
---------------------------
Name:
Title:
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<PAGE>
EXHIBIT A
DESCRIPTION OF ACQUIRED ASSETS AND EXCLUDED ASSETS
ACQUIRED ASSETS:
The term "Acquired Assets" means all assets, properties and rights of
Seller, its Subsidiaries or any of their Affiliates primarily related to or
primarily used in the Business (excluding the Excluded Assets), including the
following:
1. All of the capital stock of Italian Newco;
2. All of the capital stock of Singapore Newco;
3. All of the assets of Twinstar;
4. All Owned Facilities;
5. All tangible personal property assets (i) relating to research and
development, marketing, and administrative functions of the Business
located in: Dallas, Texas; Houston, Texas; Italy; Singapore and (ii)
primarily used by employees of the Business and employed by Buyer
after giving effect to the transactions contemplated hereby;
6. All of the capital stock in TECH and KTI owned by Seller or any
Affiliate of Seller;
7. All rights of Seller, its Subsidiaries or any of their Affiliates
under the JV Agreements;
8. All rights under all Transferred Contracts;
9. Wherever located, all inventory to the extent primarily relating to
or primarily used in the Business (including any finished goods
related to Texas Instruments-Acer Incorporated);
10. All accounts receivable to the extent primarily related to the
Business (which shall not include accounts receivable that cannot be
identified primarily related to the Business);
11. All Acquired Intellectual Property including all tangible embodiments
of such Acquired Intellectual Property;
A-1
<PAGE>
12. All assets identified on the CARS list included in Section 4.1 (e)
to the Seller Disclosure Letter;
13. All software and computer programs owned by the Seller primarily
related to or primarily used in the Business; and
14. Any other assets specified by Buyer and agreed to by Seller in
writing.
For purposes of this Agreement, Acquired Assets shall also include all
assets, properties and rights of Seller, its Subsidiaries or any of their
Affiliates with respect to the operations and business of Italian Operating
Company and Singapore Operating Company, and each of their Subsidiaries,
primarily related to or primarily used in the Business (excluding Excluded
Assets), including those assets of the nature set forth in 1 to 14 above.
A-2
<PAGE>
EXCLUDED ASSETS:
The term "Excluded Assets" means the following:
1. Cash or cash equivalents;
2. Patents and Patent applications issued or filed prior to Closing;
3. Rights of Seller under Patent license agreements with third
parties;
4. Insurance policies and claims thereunder;
5. The Transition Agreement;
6. Co-development and technology transfer agreements with Hitachi and
Mitsubishi;
7. Rights of Seller under the agreement, dated March 3, 1998, by and
among Seller, Acer Incorporated and Texas Instruments-Acer
Incorporated, as amended;
8. Any land, building and/or facilities other than all of the land,
buildings and facilities located at, or primarily used in
connection with operations at, Avezzano, Twinstar and Singapore
A/T sites (collectively, "Acquired Fab Sites");
9. Any mainframe, network or server equipment, other than network or
server equipment (i) used exclusively in the Business (ii) located
at any of the Acquired Fab Sites or (iii) located at any building,
facility or office primarily relating to or primarily used in the
Business;
10. Rights under the TI Undertaking, dated November 15, 1995, between
Seller, TECH and Citicorp Investment Bank (Singapore) Limited with
respect to the return of money placed in escrow by Seller pursuant
thereto;
11. Any intercompany receivables, payables, loans or other accounts,
to the extent the same are Excluded Liabilities;
12. (a) All equipment (except for tangible personal property such as
personal computers and workstations primarily used by
employees of the Business hired by Buyer as contemplated
hereby) located at any of the following locations:
A-3
<PAGE>
Kilby Building (KFAB) (Design & R&D/Productization/
wafer fab)
Stafford II (Houston) (QRA/Failure Analysis Laboratory)
Executive Center I, II, III (Administration)
(b) All equipment located at the Floyd Road South site except for
Test Technology Center (TTC) inventory, testers and equipment
used exclusively in memory tester development and
manufacturing, and tangible personal property such as personal
computers and workstations primarily used by employees of the
Business hired by Buyer as contempla ted hereby.
(c) All equipment located at any of the following locations except
for tangible personal property such as personal computers and
workstations primarily used by employees of the Business hired
by Buyer of the Business as contemplated hereby:
Forest Lane (Design & R&D/Production/Administration)
East Building/DP1 (Design & R&D/Productization/wafer
fab/Failure Analysis lab)
DMOS 6 (Design & R&D/Productization/wafer fab)
Stafford I (Sales/Marketing/Administration)
Hiji, Japan (Assembly/Test)
(d) All assets located at any of the following locations:
Bangalore, India Design center
Miho, Japan Wafer fab and design engineering test
Shibaura, Tokyo, Japan Marketing, PDE, administration
Hsinchu, Taiwan Product and Design Engineering
Lubbock (LMOS) 6" wafer fab (EPROM and Flash production)
Security Building Calibration Laboratory
Local sales offices
Midland-Odessa military memory operation
All tangible personal property associated with personnel not hired
by Buyer, other than any property located at any of the Acquired Fab
Sites, provided that tangible personal property associated with
certain administrative and marketing personnel located in Singapore
that are not to be hired by Buyer as agreed by Buyer and Seller
shall be considered Excluded Assets.
Notwithstanding anything herein to the contrary, none of the
assets listed on the MMP CARS ledger as of 3/31/98 (other than as
provided in clause 12(d)
A-4
<PAGE>
above), as of the date hereof or as of the Closing Date, shall be
Excluded Assets. In addition, for purposes of the definition of
Excluded Assets, references to "located at" shall mean located at
the referred to facility as of the date hereof.
13. Tax assets that (i) would be properly classified as a current asset
if required to be included in the Closing Balance Sheet), (ii)
constitute VAT related receivables, or (iii) constitute a refund or
credit of Seller's Taxes.
14. Any other assets specified by Buyer and agreed to by Seller.
A-5
<PAGE>
EXHIBIT B
DESCRIPTION OF ASSUMED LIABILITIES AND EXCLUDED LIABILITIES
ASSUMED LIABILITIES:
"Assumed Liabilities" means the following, and only the following, specific
Liabilities of the Seller Group, other than Excluded Liabilities:
1. Liabilities (other than Tax Liabilities) existing immediately prior
to the Closing (the "Effective Time") to the extent reflected as a
Liability on the Closing Balance Sheet or reserved for in an
identified reserve on such Closing Balance Sheet, but only to the
extent of the obligation to make payment of any item so reflected
or reserved for;
2. All outstanding principal and accrued and unpaid interest on the
existing indebtedness relating directly to the Avezzano facility as
of the Closing Date but in no event in excess of 345,296 million
Italian Lire principal amount and the related guarantees of such
indebtedness ;
3. All Liabilities (other than Excluded Liabilities) solely with
regard to conditions or events occurring after the Effective Time
arising under or pursuant to Transferred Contracts;
4. All accrued paid time off for Transferred Business Employees
pursuant to Section 8.5(a) of this Agreement; and
5. Any other Liability specified by Buyer and agreed to by Seller in
writing.
For purposes of this Agreement, Assumed Liabilities shall also include the
specific Liabilities of Italian Operating Company and Singapore Operating
Company of the type described in clause 1 through 5 above.
B-1
<PAGE>
EXCLUDED LIABILITIES:
"Excluded Liabilities" means all liabilities, other than Assumed
Liabilities, including the following liabilities of Seller, the Seller Group,
Subsidiaries, any Affiliates thereof, or otherwise related to the Business or
the Acquired Asset (except non-Tax Liabilities to the extent reflected as a
liability on the Closing Balance Sheet or reserved for in an identified reserve
on the Closing Balance Sheet):
1. Any Liabilities under and pursuant to any agreement on account of monies
owed or owing on or prior to the Effective Time or liabilities accruing
thereunder prior to the Effective Time;
2. All Liabilities with respect to Contracts which are not Transferred
Contracts;
3. Transfer Taxes;
4. Seller's Taxes;
5. Any Liability or obligation arising out of or in any way relating to or
resulting from any product sold on or prior to the Effective Time
(including any liability for product returns or for claims made for
injury to person, damage to property or other damage, whether made in
product liability, tort, breach of warranty or otherwise);
6. Any Liability with respect to any claim asserted after the Effective
Time where the conduct giving rise to such claim first occurred prior to
the Effective Time;
7. Any Liability with respect to any suits, actions, claims or proceedings
pending against Seller, its Subsidiaries or any of its Affiliates to the
extent any such suits, actions, claims or proceedings exist on or prior
to the Effective Time or relate to events, circumstances, conduct or
transactions occurring or existing at or prior to the Effective Time
except to the extent expressly included as an Assumed Liability;
8. Any Liability to a third party for infringement or other violation under
Intellectual Property or other proprietary rights, including, but not
limited to, claims arising out of the manufacture, use, offer for sale,
import or sale of goods, devices or apparatus, the performance of any
process or services, or the copying, modifying, distributing, performing
or displaying of any work or mask work, to the extent such claims relate
to events, circumstances, conduct or transactions occurring or existing
at or prior to the Effective Time;
9. Any Liabilities, incurred by any member of the Seller Group in
connection with performing its obligations under this Agreement or in
consummating the transactions
B-2
<PAGE>
contemplated hereby except to the extent Buyer has expressly agreed to
pay a third party or reimburse Seller on this Agreement;
10. Any Liabilities for any breach or failure to perform any covenants and
agreements contained in, or made pursuant to, this Agreement, or, on or
prior to the Effective Time, any other Contract, whether or not assumed
hereunder, including any breach arising from assignment of Contracts
hereunder without consent of third parties;
11. Liabilities for any violation of or failure to comply with any Law, to
the extent such violations or failures relate to events, circumstances,
conduct or transactions occurring or existing at or prior to the
Effective Time;
12. All Retained Environmental Liabilities;
13. The Transition Agreement;
14. All Liabilities under Title IV of ERISA or Section 412 of the Code or
any plan or contract governed thereby; and
15. Any other Liability specified by Buyer and agreed to by Seller.
B-3
<PAGE>
EXHIBIT D
---------
MARCH BALANCE SHEET
MARCH 31, 1998
--------------
($M)
----
1) Accounts receivables (Net) 244.4
2) Inventory (Net) 146.9
Prepaid Assets 2.7
TOTAL CURRENT ASSETS 394.0
3) Net Fixed Assets 621.6
Investment in JVs (Net) 44.3
Other Assets 8.8
TOTAL ASSETS 1068.7
LIABILITIES
Accounts Payable 109.6
4) Accrued Income Taxes 0
Accrued Profit Sharing 6.8
Other Accrued Liabilities 62.1
5) Long Term Debt -- Current 15.4
TOTAL CURRENT LIABILITIES 193.9
5) Long Term Debt 177.0
Deferred Incentive Balance 1.7
4) Accrued Pension/Retirement 17.8
Deferred Credit 25.5
6) TOTAL LIABILITIES 415.9
1) Any allocated receivables will either be specifically identified and
included in Acquired Assets or excluded from the Preliminary Balance Sheet
and the Adjusted Balance Sheet.
2) Excludes $5.7M of WIP inventory in Japan related to Miho production.
3) Excludes approximately $11M of CIP/PP&E associated with the Test Technology
Center (TTC). These assets identified with MMP can be transferred as part of
the Acquired Assets. Also excluded is PP&E in Miho, Japan and Bangalore,
India.
4) Accrued income taxes and US pension obligations have been excluded and will
be retained by Seller.
5) Total current and non-current long-term debt equivalent at 3/31 to 345,296
million lira.
6) Any other liability balances discharged or retained by TI as of the Closing
will be excluded from the Preliminary Balance Sheet and the Adjusted Balance
Sheet.
<PAGE>
EXHIBIT E
---------
SECURITIES RIGHTS AND RESTRICTIONS AGREEMENT
THIS SECURITIES RIGHTS AND RESTRICTIONS AGREEMENT (this "AGREEMENT") is
made as of [_________], 1998, between MICRON TECHNOLOGY, INC., a Delaware
corporation ("MICRON"), and TEXAS INSTRUMENTS INCORPORATED, a Delaware
corporation ("TI").
RECITALS
--------
A. Pursuant to the terms of the Acquisition Agreement dated as of June
[__], 1998 (the "ACQUISITION AGREEMENT"), by and between Micron and TI, Micron
(in part through certain of its subsidiaries) is simultaneously herewith
acquiring from TI (and certain of its subsidiaries) the Acquired Assets (as
defined in the Acquisition Agreement) and assuming from TI (and certain of its
subsidiaries) the Assumed Liabilities (as defined in the Acquisition Agreement).
B. In connection with the transactions contemplated by the Acquisition
Agreement, Micron has agreed to issue to TI (i) 28,933,092 unregistered shares
(the "SHARES") of Micron's Common Stock par value, $0.10 per share (the "COMMON
STOCK"), (ii) $740 million aggregate principal amount of Micron's 6-1/2%
Convertible Subordinated Notes due [_______], 2005, convertible into Common
Stock at a purchase price of $60 per share (the "2005 CONVERTIBLE NOTES") and
(iii) $210 million aggregate principal amount of Micron's 6-1/2% Subordinated
Notes due [_______], 2005 (THE "SUBORDINATED NOTES").
C. The Acquisition Agreement provides for the execution and delivery of
this Agreement at the closing of the transactions contemplated thereby.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and conditions herein and in the Acquisition Agreement, the parties
hereto hereby agree as follows:
SECTION 1
DEFINITIONS
1.1 Certain Definitions. As used in this Agreement:
-------------------
(a) "AFFILIATE" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by, or under common control with, such
other Person. For purposes of this definition, "CONTROL" when used with respect
to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing.
<PAGE>
(b) "BENEFICIAL OWNERSHIP" or "BENEFICIAL OWNER" has the meaning
provided in Rule 13d-3 promulgated under the Exchange Act. References to
ownership of Voting Securities hereunder mean beneficial ownership.
(c) "CHANGE IN CONTROL OF MICRON" shall mean a merger, consolidation
or other business combination or the sale of all or substantially all of the
assets of Micron (other than a transaction pursuant to which the holders of the
voting stock of Micron outstanding immediately prior to such transaction have
the entitlement to exercise, directly or indirectly, fifty percent (50%) or more
of the Total Voting Power of the continuing, surviving entity or transferee
immediately after such transaction).
(d) "DEMAND REGISTRATION STATEMENT" has the meaning set forth in
Section 4.1(a).
(e) "DEMAND REQUEST" has the meaning set forth in Section 4.1(a).
(f) "DEMAND/TRANCHE MANAGING UNDERWRITERS" has the meaning set forth
in Section 4.4(c).
(g) "DEMAND/TRANCHE MARKET CUT-BACK" has the meaning set forth in
Section 4.4(d).
(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(i) "GROUP" or "GROUP" shall have the meaning provided in Section
13(d)(3) of the Exchange Act and the rules and regulations promulgated
thereunder, but shall exclude any institutional underwriter purchasing Voting
Securities of Micron in connection with an underwritten registered offering for
purposes of a distribution of such securities.
(j) "INDEMNIFIED PARTY" has the meaning set forth in Section 4.6(c).
(k) "INDEMNIFYING PARTY" has the meaning set forth in Section 4.6(c).
(l) "MICRON PUBLIC OFFERING LOCK-UP" has the meaning set forth in
Section 4.9(b).
(m) "PERSON" shall mean any person, individual, corporation,
partnership, trust or other nongovernmental entity or any governmental agency,
court, authority or other body (whether foreign, federal, state, local or
otherwise).
(n) "PIGGYBACK MARKET CUT-BACK" has the meaning set forth in Section
4.3.(c).
(o) "PIGGYBACK REGISTRABLE SECURITIES" has the meaning set forth in
Section 4.3.(a).
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<PAGE>
(p) "PIGGYBACK REGISTRATION STATEMENT" has the meaning set forth in
Section 4.3(a).
(q) "PIGGYBACK REQUEST" has the meaning set forth in Section 4.3.(a).
(r) "PIGGYBACK UNDERWRITING AGREEMENT" has the meaning set forth in
Section 4.3.(b).
(s) "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(t) "REGISTRABLE SECURITIES" means (i) the Shares, (ii) the 2005
Convertible Notes, (iii) any Common Stock issued or issuable upon conversion of
the 2005 Convertible Notes and (iv) any securities issued in respect of the
foregoing as a result of any stock split, stock dividend, recapitalization, or
similar transaction.
(u) "REGISTRATION EXPENSES" has the meaning set forth in Section
4.5(a).
(v) "RESTRICTED SECURITIES" has the meaning set forth in Section
3.3(a).
(w) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(x) "SEC" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
(y) "SHELF REGISTRABLE SECURITIES" has the meaning set forth in
Section 4.2(a).
(z) "SHELF REGISTRATION STATEMENT" has the meaning set forth in
Section 4.2(a).
(aa) "SHELF REQUEST" has the meaning set forth in Section 4.2(a).
(bb) "SUSPENSION CONDITION" has the meaning set forth in Section
4.4(f).
(cc) "TI CONFLICT OF INTEREST TRANSACTION" means (i) any transaction
(including the issuance of Micron securities or a transaction of which the
issuance of such securities is a part) between Micron and a competitor of TI in
any of the businesses in which TI is engaged, or has announced an intention to
become engaged or (ii) any other transaction with respect to which TI has a
significant interest that conflicts with the interests of Micron or the other
stockholders of Micron as stockholders. For purposes of clause (i) of the
preceding sentence, the "announced intentions" of TI at any time may be
established by reference to press releases and any materials filed with the SEC
or otherwise disclosed to the public pursuant to the Securities Act or the
Exchange Act. For purposes of clause (ii) of such sentence, TI shall be deemed
to have a substantial interest that conflicts with the interests of Micron and
the other stockholders of Micron as stockholders in any situation in which TI
has a substantial economic
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<PAGE>
interest (direct or indirect) in the transaction that is greater than and
contrary to its economic interest as a stockholder of Micron.
(dd) "TI POOLING TRANSACTION LOCK-UP" has the meaning set forth in
Section 4.9(a).
(ee) "TI PUBLIC OFFERING LOCK-UP" has the meaning set forth in
Section 4.9(a).
(ff) "TRANCHE REGISTRABLE SECURITIES" has the meaning set forth in
Section 4.2(b).
(gg) "TRANCHE REQUEST" has the meaning set forth in Section 4.2(b).
(hh) "VOTING SECURITIES" means (i) all securities of Micron,
entitled, in the ordinary course, to vote in the election of directors of Micron
and (ii) for the purposes of this Agreement only, all securities of Micron
convertible into or exchangeable or exercisable for shares of Common Stock
(including the Convertible Notes), the Voting Power of which shall be deemed
equal to the number of shares of Common Stock issuable upon the conversion,
exchange or exercise of such securities. Voting Securities shall not include
stockholder rights or other comparable securities having Voting Power only upon
the happening of a trigger event or comparable contingency and which can only be
transferred together with the Voting Securities to which they attach. References
herein to meetings of holders of Voting Securities shall include meetings of any
class or type thereof (including without limitation meetings of holders of the
Convertible Notes).
(ii) "VOTING POWER" or "TOTAL VOTING POWER" of Micron (or any other
corporation) refer to the votes or total number of votes which at the time of
calculation may be cast in the election of directors of Micron (or such
corporation) at any meeting of stockholders of Micron (or such corporation) if
all securities entitled to vote in the election of directors of Micron (or such
corporation) were present and voted at such meeting; provided that for purposes
of references herein made to any Person's "Voting Power" or percentage
beneficial ownership of "Total Voting Power," any rights (other than rights
referred to in any rights plan of Micron (or any such other corporation) or a
successor to such rights plan so long as such rights can only be transferred
together with the Voting Securities to which they attach) of such Person to
acquire Voting Securities (whether or not the exercise of any such right shall
be conditioned upon the passage of time or any other contingency) shall be
deemed to have been exercised in full.
(jj) "180-DAY LIMITATION" has the meaning set forth in Section
4.4(a).
(kk) "2004 CONVERTIBLE NOTES" means Micron's 7% Convertible
Subordinated Notes due July 1, 2004, and the term "CONVERTIBLE NOTES" means the
2004 Convertible Notes and the 2005 Convertible Notes.
All capitalized terms used and not defined herein shall have the respective
meanings assigned to such terms in the Acquisition Agreement.
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<PAGE>
SECTION 2
STANDSTILL AND RELATED COVENANTS
2.1 TI Ownership of Micron Securities. On the date hereof, and without
---------------------------------
giving effect to the transactions contemplated by the Acquisition Agreement,
neither TI nor any Affiliate of TI beneficially owns any Voting Securities of
Micron (excluding any officers and directors of TI and any employee benefit or
pension plan of TI).
2.2 Standstill Provisions. TI shall not acquire, directly or indirectly,
---------------------
and shall not cause or permit any Affiliate of TI (excluding any officers and
directors of TI and any employee benefit or pension plan of TI) to acquire,
directly or indirectly (through market purchases or otherwise), record or
beneficial ownership of any Voting Securities of Micron without the prior
written consent of the Board of Directors of Micron; provided, however, that the
prior written consent of the Board of Directors of Micron shall not be required
for the acquisition of any Voting Securities of Micron pursuant to the
conversion of any of the 2005 Convertible Notes or resulting from a stock split,
stock dividend or similar recapitalization by Micron. Nothing contained in this
Section 2.2 shall adversely affect any right of TI to acquire record or
beneficial ownership of Voting Securities of Micron pursuant to any rights plan
instituted by Micron.
2.3 Voting. Unless the Board of Directors of Micron otherwise consents in
------
writing in advance, TI shall take such action (and shall cause each Affiliate of
TI that beneficially owns Voting Securities of Micron to take such action) as
may be required so that all Voting Securities of Micron beneficially owned by TI
(or any such Affiliate of TI) from time to time are voted on all matters to be
voted on by holders of Voting Securities of Micron in the same proportion (for,
against and abstain, with lost, damaged or disfigured ballots counting as
abstentions to the extent that they cannot be counted as for or against under
applicable law) as the votes cast by the other holders of Voting Securities of
Micron with respect to such matters; provided, however, that all Voting
Securities of Micron beneficially owned by TI (or any Affiliate of TI) from time
to time may be voted as TI (or any such Affiliate of TI) determines in its sole
discretion on any matter presented to the holders of Voting Securities of Micron
(by any Person other than TI, any Affiliate of TI or an "ASSOCIATE" of any of
them, as such term is defined in Rule 12b-2 under the Exchange Act), to approve
(i) any merger, consolidation or other business combination involving Micron,
(ii) any sale of all or substantially all of the assets of Micron, (iii) any
issuance of equity or equity-linked securities of Micron requiring stockholder
approval pursuant to applicable stock exchange rules; provided, however, that
neither TI nor any Affiliate of TI shall be entitled to vote on any matter set
forth in clauses (i), (ii) or (iii) hereof that constitutes, involves or is part
of, a TI Conflict of Interest Transaction. TI (or any Affiliate of TI), as the
holder of Voting Securities of Micron, shall use its best efforts to be present,
in person or by proxy, at all meetings of the stockholders of Micron so that all
Voting Securities of Micron beneficially owned by TI (or such Affiliate of TI)
from time to time may be counted for the purposes of determining the presence of
a quorum at such meetings. The foregoing provision shall also apply to the
execution by TI of any written consent in lieu of a meeting of holders of Voting
Securities of Micron or any class thereof.
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2.4 Voting Trust. TI shall not, and shall not cause or permit any
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Affiliate of TI to, deposit any Voting Securities of Micron in a voting trust
or, except as otherwise provided herein, subject any Voting Securities of Micron
to any arrangement or agreement with respect to the voting of such Voting
Securities of Micron.
2.5 Solicitation of Proxies. Without the prior written consent of the
-----------------------
Board of Directors of Micron, TI shall not, and shall not cause or permit any
Affiliate of TI to, directly or indirectly (i) initiate, propose or otherwise
solicit Micron stockholders for the approval of one or more stockholder
proposals with respect to Micron or induce or attempt to induce any other Person
to initiate any stockholder proposal, (ii) make, or in any way participate in,
any "SOLICITATION" of "PROXIES" (as such terms are defined or used in Regulation
14a-1 under the Exchange Act) with respect to any Voting Securities of Micron,
or become a "PARTICIPANT" in any "ELECTION CONTEST" (as such terms are used in
Rule 14a-11 of Regulation 14A under the Exchange Act), with respect to Micron or
(iii) call or seek to have called any meeting of the holders of Voting
Securities of Micron.
2.6 Acts in Concert with Others. Except as contemplated herein, TI shall
---------------------------
not, and shall not cause or permit any Affiliate of TI, to participate in the
formation, or encourage the formation, of any Person which owns or seeks to
acquire beneficial ownership of, or otherwise acts in concert in respect of the
voting or disposition of, Voting Securities of Micron. Without limiting the
generality of the foregoing, and except as contemplated herein, TI shall not,
and shall not cause or permit any Affiliate of TI to: (i) join a partnership,
limited partnership, syndicate or other group, or otherwise act in concert with
any third person, for the purpose of acquiring, holding, or disposing of Voting
Securities of Micron; (ii) seek election to or seek to place a representative on
the Board of Directors of Micron; (iii) seek the removal of any member of the
Board of Directors of Micron; (iv) otherwise seek control of the management,
Board of Directors or policies of Micron; (v) solicit, propose, seek to effect
or negotiate with any other Person with respect to any form of business
combination transaction with Micron or any Affiliate thereof, or any
restructuring, recapitalization or similar transaction with respect to Micron or
any Affiliate thereof; (vi) solicit, make or propose or encourage or negotiate
with any other Person with respect to, or announce an intent to make, any tender
offer or exchange offer for any Voting Securities of Micron; (vii) disclose an
intent, purpose, plan or proposal with respect to Micron or any Voting
Securities of Micron inconsistent with the provisions of this Agreement,
including an intent, purpose, plan or proposal that is conditioned on or would
require Micron to waive the benefit of or amend any provision of this Agreement;
or (vii) assist, participate in, facilitate, encourage or solicit any effort or
attempt by any Person to do or seek to do any of the foregoing. TI shall not,
and shall not cause or permit any Affiliate of TI to, encourage or render advice
to or make any recommendation or proposal to any Person to engage in any of the
actions covered by Section 2.5 and this Section 2.6 hereof.
2.7 Termination. The provisions of this Article 2 shall terminate upon
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the earlier to occur of: (i) such time as TI (together with all Affiliates of
TI) beneficially owns in the aggregate Voting Securities of Micron representing
less than five percent (5%) of the Total Voting Power of Micron; or (ii) the
closing or other completion of a Change in Control of Micron.
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SECTION 3
RESTRICTIONS ON TRANSFER OF
SECURITIES; COMPLIANCE WITH SECURITIES LAWS
3.1 Restrictions on Transfer of Voting Securities of Micron. Subject to
-------------------------------------------------------
Section 3.6 hereof, TI shall not, and shall not cause or permit any Affiliate of
TI to, directly or indirectly, offer to sell, contract to sell, make any short
sale of, or otherwise sell, dispose of, loan, gift, pledge or grant any options
or rights with respect to, any Voting Securities of Micron, now or hereafter
acquired, or with respect to which TI (or any Affiliate of TI) has or hereafter
acquires the power of disposition (or enter into any agreement or understanding
with respect to the foregoing), except as set forth below:
(a) to Micron, or any Person or group approved in writing in advance
by the Board of Directors of Micron;
(b) to any wholly-owned subsidiary of TI, so long as such subsidiary
agrees in writing (in form reasonably acceptable to counsel for Micron) to hold
such Voting Securities of Micron subject to all the provisions of this
Agreement, and so agrees to transfer such Voting Securities of Micron to TI or
another wholly-owned subsidiary of TI if it ceases to be a wholly-owned
subsidiary of TI;
(c) pursuant to a firm commitment, underwritten public offering of
Voting Securities of Micron registered under the Securities Act; provided,
however, that such offering is structured to distribute such securities through
an underwriter in accordance with procedures designed to ensure (as far as is
practically possible) that beneficial ownership of the Voting Securities of
Micron with aggregate Voting Power of more than five percent (5%) of the Total
Voting Power of Micron then in effect shall not be transferred during such
underwriting to any single Person or group;
(d) through a sale of Voting Securities of Micron pursuant to Rule 144
under the Securities Act; provided, however, that any such sale (i) complies
with the manner of sale provisions under paragraph (f) of Rule 144 or (ii) is of
securities with Voting Power aggregating less than five percent (5%) of the
Total Voting Power of Micron and is not made knowingly directly or indirectly
to: (A) any Person or group which has theretofore filed a Schedule 13D with the
SEC with respect to any class of "EQUITY SECURITY" (as defined in Rule 13a11-1
under the Exchange Act) of Micron and which, at the time of such sale, continues
to reflect beneficial ownership in excess of five percent (5%) of the Total
Voting Power of Micron; (B) any Person or group known to TI (without inquiry or
investigation) to beneficially own in excess of five percent (5%) of any Voting
Securities of Micron or to be accumulating stock on behalf of or acting in
concert with any such Person or group or a Person or group contemplated by
clause (A) above; or (C) any Person or group that has announced or commenced an
unsolicited offer for any Voting Securities of Micron or publicly initiated,
proposed or otherwise solicited Micron stockholders for the approval of one or
more stockholder proposals with respect to Micron or publicly made, or in any
way participated in, any "SOLICITATION" of "PROXIES" (as such terms are defined
or used in Regulation 14A under the Exchange Act) with respect to any Voting
Securities
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of Micron, or become a "PARTICIPANT" in any "ELECTION CONTEST" (as such terms
are used in Rule 14a-11 of Regulation 14A under the Exchange Act);
(e) pursuant to any private sale of Voting Securities of Micron exempt
from the registration requirements under the Securities Act, provided that no
such sale may be made (i) to any Person or group which, after giving effect to
such sale, will beneficially own or have the right to acquire Voting Securities
of Micron with aggregate Voting Power of more than five percent (5%) of the
Total Voting Power of Micron unless such Person or group is an institutional
investor that acquires such Voting Securities solely for investment, in which
case the total number of Voting Securities that may be sold to such Person or
group shall be limited so that such Person or group shall not own or have the
right to acquire more than ten percent (10%) of the Total Voting Power of Micron
after giving effect to the proposed sale; and, provided, further, that any such
purchaser (and any transferee of such purchaser) shall agree to take and hold
such securities subject to the provisions and upon the conditions specified in
this Article 3, and it will be a condition precedent to the effectiveness of any
such transfer that TI shall have delivered to Micron a written agreement of such
purchaser to that effect in form and substance reasonably satisfactory to
Micron;
(f) in response to an offer to purchase or exchange for cash or other
consideration any Voting Securities, which in any case is not opposed by the
Board of Directors of Micron within the time such Board is required, pursuant to
regulations under the Exchange Act, to advise the stockholders of Micron of such
Board's position with respect to such offer, or, if no such regulations are
applicable, within ten (10) business days of the commencement of such offer, or
pursuant to a merger, consolidation or other business combination involving
Micron approved by the Board of Directors of Micron; or
(g) subject to Micron's prior consent (which shall not be unreasonably
withheld), pursuant to bona fide pledges of such Restricted Securities to
institutional lenders (provided that the number of such lenders to which, or for
the benefit of which, such pledges may be made, shall not exceed twenty (20) in
the aggregate), to secure a loan, guarantee, letter of credit facility or other
indebtedness or financial support; provided that each such lender to which, or
for the benefit of which, such pledge is made agrees in writing to hold such
Restricted Securities subject to all provisions of this Agreement, including the
limitations on any sale or other disposition of such Restricted Securities.
3.2 Restrictions on Transfer of Subordinated Notes. Subject to Section
----------------------------------------------
3.6 hereof, TI shall not, and shall not cause or permit any Affiliate of TI to,
directly or indirectly, offer to sell, contract to sell, make any short sale of,
or otherwise sell, dispose of, loan, gift, pledge or grant any options or rights
with respect to, any of the Subordinated Notes, now or hereafter acquired, or
with respect to which TI (or such Affiliate of TI) has or hereafter acquires the
power of disposition (or enter into any agreement or understanding with respect
to the foregoing), except through a sale of a minimum of $10,000,000 principal
amount of Subordinated Notes (and of any integral multiple of $1,000,000 in
excess thereof) under Rule 144A under the Securities Act to a "QUALIFIED
INSTITUTIONAL BUYER" as defined in such Rule 144A.
3.3 Restrictive Legends.
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(a) The certificate or certificates representing the (i) the Shares,
(ii) the 2005 Convertible Notes, (iii) any Common Stock issued or issuable upon
conversion of the 2005 Convertible Notes and (iv) any securities issued in
respect of the foregoing as a result of any stock split, stock dividend,
recapitalization, or similar transaction initially acquired by TI from Micron in
accordance with the terms of this Agreement (collectively, the "RESTRICTED
SECURITIES") shall be stamped or otherwise imprinted with a legend substantially
in the following form (in addition to any legend required under applicable state
securities laws):
THE SHARES (or, as applicable, CONVERTIBLE NOTES) REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. SUCH SHARES (or, as applicable,
CONVERTIBLE NOTES) MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER AS TO THE
AVAILABILITY OF AN EXEMPTION FROM REGISTRATION.
(b) In addition to the legend provided for in Section 3.3(a), the
certificate or certificates representing the Restricted Securities shall be
stamped or otherwise imprinted with a legend substantially in the following
form:
THE SHARES (or, as applicable, CONVERTIBLE NOTES) REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER, INCLUDING ANY SALE,
PLEDGE OR OTHER HYPOTHECATION SET FORTH IN AN AGREEMENT DATED AS OF
[_______], 1998 BETWEEN THE ISSUER AND TEXAS INSTRUMENTS INCORPORATED, A
COPY OF WHICH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE
BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE ISSUER
AT THE ISSUER'S PRINCIPAL EXECUTIVE OFFICES.
(c) The certificate or certificates representing the Subordinated
Notes shall be stamped or otherwise imprinted with legends substantially in the
following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS NOTE ONLY (A) TO THE ISSUER, OR (B) FOR SO LONG AS
THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
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144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A.
3.4 Procedures for Certain Transfers.
--------------------------------
(a) The holder of each certificate representing Restricted Securities,
by acceptance thereof, agrees to comply in all respects with the provisions of
this Article 3.
(b) Prior to any proposed transfer of any Restricted Securities
pursuant to Sections 3.1(a), (b), (e) and (g) hereof, TI shall give written
notice to Micron of TI's intention to effect such transfer. Each such notice
shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall be accompanied by either: (i) a written opinion of
legal counsel (including in-house counsel), who shall be reasonably satisfactory
to Micron, addressed to Micron and reasonably satisfactory in form and substance
to Micron's counsel, to the effect that the proposed transfer of the Restricted
Securities may be effected without registration under the Securities Act; or
(ii) a "no action" letter from the SEC and a copy of any request by TI (together
with all supplements or amendments thereto), which shall have been provided to
Micron at or prior to the time of first delivery to the SEC's staff, to the
effect that the transfer of such securities without registration will not result
in a recommendation by the staff of the SEC that action be taken with respect
thereto, whereupon TI shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by TI to Micron.
(c) In connection with any proposed transfer of Restricted Securities
pursuant to Section 3.1(d) hereof, TI shall comply with all of the requirements
of Rule 144 under the Securities Act and the reasonable requirements of Micron's
transfer agent with respect to sales of Restricted Securities pursuant to Rule
144.
(d) Each certificate evidencing the Restricted Securities transferred
as herein provided (other than a transfer pursuant to Section 3.1(c)) shall bear
the appropriate restrictive legend set forth (or described) in Section 3.4(a)
above, except that such certificate shall not bear such restrictive legend if:
(i) in the opinion of counsel for Micron, such legend is not required in order
to establish compliance with any provisions of the Securities Act; (ii) the
Restricted Securities have been held by the holder for more than two years, and
the holder represents to counsel for Micron that it has not been an "AFFILIATE"
(as such term is defined for purposes of Rule 144) of Micron during the three-
month period prior to the sale and shall not become an affiliate (as such term
is defined for purposes of Rule 144) of Micron without resubmitting the
Restricted Securities for reimposition of the legend; or (iii) the Restricted
Securities have been sold pursuant to Rule 144 and in compliance with Section
3.1(d). In addition, each certificate evidencing the Restricted Securities
transferred pursuant to this Article 3 (other than transfers pursuant to
Sections 3.1(c) and 3.1(d) hereof) shall bear the legend set forth in Section
3.3(b) above.
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3.5 Covenant Regarding Exchange Act Filings. With a view to making
---------------------------------------
available to TI the benefits of Rule 144 promulgated under the Securities Act,
and any other rules or regulations of the SEC which may at any time permit TI to
sell any Restricted Securities without registration, until the date of
termination of this Agreement, Micron agrees to use commercially reasonable
efforts to file with the SEC in a timely manner all reports and other documents
required to be filed under the Exchange Act.
3.6 Termination. The provisions of this Article 3 shall terminate upon
-----------
the later to occur of: (i) the tenth anniversary date of this Agreement and (ii)
such time as TI (together with all Affiliates of TI) beneficially owns in the
aggregate Voting Securities of Micron representing less than five percent (5%)
of the Total Voting Power of Micron or upon the closing or other completion of a
Change in Control of Micron.
SECTION 4
REGISTRATION RIGHTS
4.1 Demand Registration.
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(a) If at any time after the six month anniversary date of this
Agreement, Micron shall receive from TI a written request (a "DEMAND REQUEST")
that Micron register on Form S-3 under the Securities Act (or if such form is
not available, any registration statement form then available to Micron)
Registrable Securities equal to at least two percent (2%) of the Voting
Securities of Micron outstanding on the date of such Demand Request, then Micron
shall use commercially reasonable efforts to cause the Registrable Securities
specified in such Demand Request (THE "DEMAND REGISTRABLE SECURITIES") to be
registered as soon as reasonably practicable so as to permit the offering and
sale thereof and, in connection therewith, shall prepare and file with the SEC
as soon as practicable after receipt of such Demand Request, a registration
statement (a "DEMAND REGISTRATION STATEMENT") to effect such registration;
provided, however, that each such Demand Request shall: (i) specify the number
of Demand Registrable Securities intended to be offered and sold by TI pursuant
thereto (which number of Demand Registrable Securities shall not be less than
two percent (2%) of the Voting Securities of Micron outstanding on the date of
such Demand Request); (ii) express the present intention of TI to offer or cause
the offering of such Demand Registrable Securities pursuant to such Demand
Registration Statement, (iii) describe the nature or method of distribution of
such Demand Registrable Securities pursuant to such Demand Registration
Statement (including, in particular, whether TI plans to effect such
distribution by means of an underwritten offering); and (iv) contain the
undertaking of TI to provide all such information and materials and take all
such actions as may be required in order to permit Micron to comply with all
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations of the SEC thereunder, and to obtain any desired acceleration of
the effective date of such Demand Registration Statement.
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(b) The procedures to be followed by Micron and TI, and the respective
rights and obligations of Micron and TI, with respect to the preparation, filing
and effectiveness of Demand Registration Statements and the distribution of
Demand Registrable Securities pursuant to Demand Registration Statements under
this Section 4.1 are set forth in Section 4.4 hereof.
4.2 Shelf Registration.
------------------
(a) If at any time after the six month anniversary date of this
Agreement, Micron shall receive from TI a written request (a "SHELF REQUEST")
that Micron register pursuant to Rule 415(a)(1)(i) under the Securities Act (or
any successor rule with similar effect) a delayed offering of Registrable
Securities, equal to at least five percent (5%) of the Voting Securities of
Micron outstanding on the date of such Shelf Request, then Micron shall use
commercially reasonable efforts to cause the Registrable Securities specified in
such Shelf Request (the "SHELF REGISTRABLE SECURITIES") to be registered as soon
as reasonably practicable so as to permit the sale thereof and, in connection
therewith, shall (i) prepare and file with the SEC as soon as practicable after
receipt of such Shelf Request, a shelf registration statement on Form S-3
relating to such Shelf Registrable Securities, if such Form S-3 is available for
use by Micron (or any successor form of registration statement to such Form S-
3), to effect such registration (a "SHELF REGISTRATION STATEMENT"), to enable
the distribution of such Shelf Registrable Securities; provided, however, that
each such Shelf Request shall: (i) specify the number of Shelf Registrable
Securities intended to be offered and sold by TI pursuant thereto (which number
of Shelf Registrable Securities shall not be less than five percent (5%) of the
Voting Securities of Micron outstanding on the date of such Shelf Request); (ii)
express the intention of TI to offer or cause the offering of such Shelf
Registrable Securities pursuant to such Shelf Registration Statement on a
delayed basis in the future; (iii) describe the nature or method of the proposed
offer and sale of such Shelf Registrable Securities pursuant to such Shelf
Registration Statement; and (iv) contain the undertaking of TI to provide all
such information and materials and take all such actions as may be required in
order to permit Micron to comply with all applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations of the SEC
thereunder, and to obtain any desired acceleration of the effective date of such
Shelf Registration Statement. TI shall not be entitled to make more than one
Shelf Request during any three hundred sixty-five (365) day period.
(b) It is expressly agreed by the parties that the sole purpose of
Micron filing and maintaining an effective a Shelf Registration Statement for
the delayed offering of Shelf Registrable Securities by TI is to make the
process of distributing Registrable Securities by TI more convenient for both
parties by reducing or eliminating the need to file a new Demand Registration
Statement each time that TI decides to sell Registrable Securities. After a
Shelf Registration Statement has been declared effective under the Securities
Act by the SEC, then, upon the written request of TI (a "TRANCHE REQUEST"),
Micron shall prepare such amendments to such Shelf Registration Statement
(including post-effective amendments), if any, and such amendments or
supplements to the prospectus relating to the Registrable Securities to be
offered thereunder pursuant to such Tranche Request (the "TRANCHE REGISTRABLE
SECURITIES"), as is necessary to facilitate the distribution of such Tranche
Registrable Securities pursuant to such Tranche Request; provided, however, that
such Tranche Request shall: (i) specify the number of Tranche Registrable
Securities intended to be offered and sold by TI pursuant
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thereto (which number of Tranche Registrable Securities shall not be less than
two percent (2%) of the Voting Securities of Micron outstanding on the date of
such Tranche Request); (ii) express the present intention of TI to offer or
cause the offering of such Tranche Registrable Securities pursuant to the Shelf
Registration Statement, (iii) describe the nature or method of distribution of
such Tranche Registrable Securities pursuant to the Shelf Registration Statement
(including, in particular, whether TI plans to effect such distribution by means
of an underwritten offering); and (iv) contain the undertaking of TI to provide
all such information and materials and take all such actions as may be required
in order to permit Micron to comply with all applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations of the SEC
thereunder.
(c) The procedures to be followed by Micron and TI, and the respective
rights and obligations of Micron and TI, with respect to the preparation, filing
and effectiveness of Shelf Registration Statements and the distribution of
Tranche Registrable Securities pursuant to Shelf Registration Statements under
this Section 4.2 are set forth in Section 4.4 hereof.
4.3 Piggyback Registration.
----------------------
(a) If at any time after the six month anniversary date of this
Agreement, Micron shall determine to register any of its equity or equity-linked
securities (other than registration statements relating to (i) employee,
consultant or distributor compensation or incentive arrangements (including
employee benefit plans), (ii) acquisitions or any transaction or transactions
under Rule 145 under the Securities Act (or any successor rule with similar
effect), (iii) distributions by principal stockholders, their Affiliates or
transferees (unless consented to by such principal stockholders, Affiliates or
transferees), or (iv) pursuant to Rule 415 under the Securities Act), then
Micron will promptly give TI written notice thereof and include in such Micron-
initiated, non-shelf, registration statement (a "PIGGYBACK REGISTRATION
STATEMENT"), and in any underwriting involved therein, all Registrable
Securities (the "PIGGYBACK REGISTRABLE SECURITIES") specified in a written
request made by TI (a "PIGGYBACK REQUEST") within five (5) business days after
receipt of such written notice from Micron; provided, however, that nothing in
this Section 4.3(a), or any other provision of this Agreement, shall be
construed to limit the absolute right of Micron, for any reason and in its sole
discretion: (i) to delay, suspend or terminate the filing of any Piggyback
Registration Statement; (ii) to delay the effectiveness of any Piggyback
Registration Statement; (iii) to terminate or reduce the number of Piggyback
Registrable Securities to be distributed pursuant to any Piggyback Registration
Statement (including, without limitation, pursuant to Section 4.3(c) hereof); or
(iv) to withdraw such Piggyback Registration Statement.
(b) If the Piggyback Registration Statement of which Micron gives
notice is for an underwritten offering, Micron shall so advise TI as a part of
the written notice given pursuant to Section 4.3(a). In such event, the right
of TI to registration pursuant to this Section 4.3 shall be conditioned upon the
agreement of TI to participate in such underwriting and in the inclusion of such
Piggyback Registrable Securities in the underwriting to the extent provided
herein. TI shall (together with Micron and any other holders distributing
securities in such Piggyback Registration Statement, if
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any) enter into an underwriting agreement (the "PIGGYBACK UNDERWRITING
AGREEMENT") in customary form with the underwriter or underwriters selected for
such underwriting by Micron.
(c) Notwithstanding any other provision of this Agreement, if the
managing underwriters of any underwritten offering pursuant to a Piggyback
Request determine, in their sole discretion that, after including all the shares
to be offered by Micron and all the shares of any other Persons entitled to
registration rights with respect to such Piggyback Registration Statement
(pursuant to other agreements with Micron), marketing factors require a
limitation of the number of Piggyback Registrable Securities to be underwritten,
the managing underwriters of such offering may exclude any and all of the
Piggyback Registrable Securities (a "PIGGYBACK MARKET CUT-BACK"). If TI
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to Micron and the managing underwriters. Any
Piggyback Registrable Securities excluded or withdrawn from such underwriting
shall be withdrawn from such Piggyback Registration Statement.
(d) Except to the extent specifically provided in this Section 4.3
hereof, the procedures to be followed by Micron and TI, and the respective
rights and obligations of Micron and TI, with respect to the distribution of any
Piggyback Registrable Securities by TI pursuant to any Piggyback Registration
Statement filed by Micron shall be as set forth in the Piggyback Underwriting
Agreement, or any other agreement or agreements governing the distribution of
such Piggyback Registrable Securities pursuant to such Piggyback Registration
Statement.
4.4 Demand and Shelf Registration Procedures, Rights and Obligations. The
----------------------------------------------------------------
procedures to be followed by Micron and TI, and the respective rights and
obligations of Micron and TI, with respect to the preparation, filing and
effectiveness of Demand Registration Statements and Shelf Registration
Statements, respectively, and the distribution of Demand Registrable Securities
and Tranche Registrable Securities, respectively, pursuant thereto, are as
follows:
(a) TI shall not be entitled to make more than one Demand Request or
Tranche Request during any one hundred eighty (180) day period (the "180-DAY
LIMITATION"); provided, however, that (i) any Demand Request that: (A) does not
result in the corresponding Demand Registration Statement being declared
effective by the SEC; (B) is withdrawn by TI following the imposition of a stop
order by the SEC with respect to the corresponding Demand Registration
Statement; (C) is withdrawn by TI as a result of the exercise by Micron of its
suspension rights pursuant to Sections 4.4(e) or (f) hereof; or (D) is withdrawn
by TI as a result of a Demand/Tranche Market Cut-Back (as defined in Section
4.4(d) hereof); and (ii) any Tranche Request that: (A) is withdrawn by TI
following the imposition of a stop order by the SEC with respect to the
corresponding Shelf Registration Statement; (B) is withdrawn by TI as a result
of the exercise by Micron of its suspension rights pursuant to Sections 4.4(e)
or (f) hereof; or (C) is withdrawn by TI as a result of a Demand/Tranche Market
Cut-Back, shall not count for the purposes of determining compliance with the
180-Day Limitation. Any Demand Request or Tranche Request that is withdrawn by
TI for any reason other than as set forth in the previous sentence shall count
for purposes of determining compliance with the 180-Day Limitation. Piggyback
Requests shall not count for purposes of determining compliance with the 180-Day
Limitation regardless of whether a Piggyback Registration Statement is filed,
declared effective or
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withdrawn or whether any distribution of Piggyback Registrable Securities is
effected, terminated or cut-back (pursuant to Section 4.3(c) hereof, or
otherwise).
(b) Micron shall use commercially reasonable efforts to cause each
Demand Registration Statement and Shelf Registration Statement to be declared
effective promptly and to keep such Demand Registration Statement and Shelf
Registration Statement continuously effective until the earlier to occur of: (i)
the sale or other disposition of the Registrable Securities so registered; (ii)
sixty (60) days after (A) the effective date of any Demand Registration
Statement or (B) the date of the final prospectus used to confirm sales in
connection with any offering of Tranche Registrable Securities; and (iii) the
termination of TI's registration rights pursuant to Section 4.10 hereof. Micron
shall prepare and file with the SEC such amendments and supplements to each
Demand Registration Statement and Shelf Registration Statement and each
prospectus used in connection therewith as may be necessary to make and to keep
such Demand Registration Statement and Shelf Registration Statement effective
and to comply with the provisions of the Securities Act with respect to the sale
or other disposition of all Registrable Securities proposed to be distributed
pursuant to such Demand Registration Statement and Shelf Registration Statement
until the earlier to occur of: (i) the sale or other disposition of such
Registrable Securities so registered; (ii) sixty (60) days after (A) the
effective date of any Demand Registration Statement or (B) the date of the final
prospectus used to confirm sales in connection with any offering of Tranche
Registrable Securities; and (iii) the termination of TI's registration rights
pursuant to Section 4.10 hereof.
(c) In connection with any underwritten offering pursuant to a Demand
Registration Statement or a Shelf Registration Statement, Micron, on the one
hand, and TI, on the other hand, shall each select one investment banking firm
to serve as co-manager of such offering. The co-manager selected by Micron
shall be subject to the prior approval of TI, which approval shall not be
unreasonably withheld, and the co-manager selected by TI shall be subject to the
prior approval of Micron, which approval shall not be unreasonably withheld.
Each of the co-managers so selected by Micron and TI are hereinafter
collectively referred to as the "DEMAND/TRANCHE MANAGING UNDERWRITERS." The
Demand/Tranche Underwriter selected by TI shall be the lead Demand/Tranche
Managing Underwriter, whose responsibilities shall include running the "books"
for any offering. Micron shall, together with TI, enter into an underwriting
agreement with the Demand/Tranche Managing Underwriters, which agreement shall
contain representations, warranties, indemnities and agreements then customarily
included by an issuer in underwriting agreements with respect to secondary
distributions under demand registration statements or shelf registration
statements, as the case may be, and shall stipulate that the Demand/Tranche
Managing Underwriters will receive equal commissions and fees and other
remuneration in connection with the distribution of any Demand Registrable
Securities or Tranche Registrable Securities thereunder.
(d) Notwithstanding any other provision of this Agreement, the number
of Demand Registrable Securities or Tranche Registrable Securities proposed to
be distributed by TI pursuant to any Demand Request or Tranche Request may be
limited by the Demand/Tranche Managing Underwriters if such Demand/Tranche
Managing Underwriters determine that the sale of such Demand Registrable
Securities or Tranche Registrable Securities would significantly and adversely
affect the market price
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of the Common Stock (a "DEMAND/TRANCHE MARKET CUT-BACK"). If TI disapproves of
the terms of any proposed underwritten offering under a Demand Registration
Statement or a Shelf Registration Statement (including, without limitation, any
reduction in the number of Demand Registrable Securities or Tranche Registrable
Securities, as the case may be, to be sold by TI thereunder pursuant to this
Section 4.4(d)), TI may elect to withdraw therefrom by written notice to Micron
and the Demand/Tranche Managing Underwriters. Any Demand Registrable Securities
excluded or withdrawn from such underwriting shall also be withdrawn from any
applicable Demand Registration Statement.
(e) Notwithstanding any other provisions of this Agreement, in the
event that Micron receives a Demand Request, Shelf Request or Tranche Request at
a time when Micron (i) shall have filed, or has a bona fide intention to file, a
registration statement with respect to a proposed public offering of equity or
equity-linked securities or (ii) has commenced, or has a bona fide intention to
commence, a public offering of equity or equity-linked securities pursuant to an
existing effective shelf or other registration statement, then Micron shall be
entitled to suspend, for a period of up to ninety (90) days after the receipt by
Micron of such Demand Request, Shelf Request or Tranche Request, the filing of
any Demand Registration Statement or Shelf Registration Statement or the
implementation of any Tranche Request.
(f) Notwithstanding any other provision of this Agreement, in the
event that Micron determines that: (i) non-public material information regarding
Micron exists, the immediate disclosure of which would be significantly
disadvantageous to Micron; (ii) the prospectus constituting a part of any Demand
Registration Statement or Shelf Registration Statement covering the distribution
of any Demand Registrable Securities or Tranche Securities contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) an offering
of Demand Registrable Securities or Tranche Registrable Securities would
materially interfere with any proposed material acquisition, disposition or
other similar corporate transaction or event involving Micron (each of the
events or conditions referred to in clauses (i), (ii) and (iii) of this sentence
is hereinafter referred to as a "SUSPENSION CONDITION"), then Micron shall have
the right to suspend the filing or effectiveness of any Demand Registration
Statement or Shelf Registration Statement or to suspend any distribution of
Demand Registrable Securities or Tranche Registrable Securities pursuant to any
effective Demand Registration Statement or Shelf Registration Statement for so
long as such Suspension Condition exists. Micron will as promptly as practicable
provide written notice to TI when a Suspension Condition arises and when it
ceases to exist. Upon receipt of notice from Micron of the existence of any
Suspension Condition, TI shall forthwith discontinue efforts to: (i) file or
cause any Demand Registration Statement or Shelf Registration Statement to be
declared effective by the SEC (in the event that such Demand Registration
Statement or Shelf Registration Statement has not been filed, or has been filed
but not declared effective, at the time TI receives notice that a Suspension
Condition has arisen); or (ii) offer or sell Demand Registrable Securities or
Tranche Registrable Securities (in the event that such Demand Registration
Statement or Shelf Registration Statement has been declared effective at the
time TI receives notice that a Suspension Condition has arisen). In the event
that TI had previously commenced or was about to commence the distribution of
Demand Registrable Securities or Tranche Registrable Securities pursuant to a
prospectus under an effective Demand Registration Statement or Shelf
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<PAGE>
Registration Statement, then Micron shall, as promptly as practicable after the
Suspension Condition ceases to exist, make available to TI (and to each
underwriter, if any, participating in such distribution) an amendment or
supplement to such prospectus. If so directed by Micron, TI shall deliver to
Micron all copies, other than permanent file copies then in TI's possession, of
the most recent prospectus covering such Demand Registrable Securities or
Tranche Registrable Securities at the time of receipt of such notice.
(g) Notwithstanding any other provision of this Agreement, Micron
shall not be permitted to postpone (i) the filing or effectiveness of any Demand
Registration Statement or Shelf Registration Statement or (ii) the distribution
of any Demand Registrable Securities or Tranche Registrable Securities pursuant
to an effective Demand Registration Statement or an effective Shelf Registration
Statement pursuant to Sections 4.4(e), 4.4(f) or 4.9(a) hereof for an aggregate
of more than two hundred seventy-five (275) days in any three hundred sixty-five
(365) day period (including any market standoff periods applicable to TI
pursuant to Section 4.9(a) hereof); provided, however, that in the event that
any TI Pooling Transaction Lock-Up (as defined in Section 4.9(a) hereof) would
expire by its terms on a date that would extend beyond the two hundred seventy-
five (275) day limitation, then Micron shall have the right to (i) postpone the
filing or effectiveness of any Demand Registration Statement or Shelf
Registration Statement or (ii) the distribution of any Demand Registrable
Securities or Tranche Registrable Securities pursuant to an effective Demand
Registration Statement or an effective Shelf Registration Statement until such
time as such TI Pooling Transaction Lock-Up expires.
(h) Micron shall promptly notify TI of any stop order issued or, to
Micron's knowledge, threatened, to be issued by the SEC with respect to any
Demand Registration Statement or Shelf Registration Statement as to which a
Tranche Request is pending, and will use its best efforts to prevent the entry
of such stop order or to remove it if entered at the earliest possible date.
(i) Micron shall furnish to TI (and any underwriters in connection
with any underwritten offering) such number of copies of any prospectus
(including any preliminary prospectus and any amended or supplemented
prospectus), in conformity with the requirements of the Securities Act, as TI
(and such underwriters) shall reasonably request in order to effect the offering
and sale of any Demand Registrable Securities or Tranche Registrable Securities
to be offered and sold, but only while Micron shall be required under the
provisions hereof to cause the Demand Registration Statement or Shelf
Registration Statement pursuant to which such Demand Registrable Securities or
Tranche Registrable Securities are intended to be distributed to remain current.
(j) Micron shall use commercially reasonable efforts to register or
qualify the Demand Registrable Securities and Tranche Registrable Securities
covered by each Demand Registration Statement and Shelf Registration Statement,
respectively, under the state securities or "blue sky" laws of such states as TI
shall reasonably request, maintain any such registration or qualification
current, until the earlier to occur of: (i) the sale of such Demand Registrable
Securities or Tranche Registrable Securities so registered; (ii) sixty (60) days
after (A) the effective date of any Demand Registration Statement or (B) the
date of the final prospectus used to confirm sales in connection with such
distribution (in the case of an offering of Tranche Registrable Securities
pursuant to a Shelf Registration
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Statement); and (iii) the termination of TI's registration rights pursuant to
Section 4.10 hereof; provided, however, that Micron shall not be required to
take any action that would subject it to the general jurisdiction of the courts
of any jurisdiction in which it is not so subject or to qualify as a foreign
corporation in any jurisdiction where Micron is not so qualified.
(k) Micron shall furnish to TI and to each underwriter engaged in an
underwritten offering of Demand Registrable Securities or Tranche Registrable
Securities, a signed counterpart, addressed to TI or such underwriter, of (i) an
opinion or opinions of counsel to Micron (with respect to Micron and securities
law compliance by Micron) and (ii) a comfort letter or comfort letters from
Micron's independent public accountants, each in customary form and covering
such matters of the type customarily covered by opinions or comfort letters, as
the case may be, as TI or the managing underwriters may reasonably request.
(l) Micron shall use commercially reasonable efforts to make
appropriate members of its management reasonably available for due diligence
purposes, "road show" presentations and analyst presentations in connection with
any distributions of Demand Registrable Securities or Tranche Registrable
Securities pursuant to a Demand Registration Statement or a Shelf Registration
Statement.
(m) Micron shall use commercially reasonable efforts to cause all
Demand Registrable Securities and Tranche Registrable Securities to be listed on
each securities exchange on which similar securities of Micron are then listed.
(n) At or prior to the effectiveness of any Demand Registration
Statement or Shelf Registration Statement covering the offering of the 2005
Convertible Notes, Micron shall qualify the indenture (or any supplemental
indenture) relating to such 2005 Convertible Notes under the Trust Indenture Act
of 1939, as amended.
(o) Micron shall make generally available to its securityholders, as
soon as reasonably practicable, an earnings statement covering a period of
twelve (12) months, beginning three months after the effective date of any
Demand Registration Statement relating to the distribution of Demand Registrable
Securities or the date of any final prospectus used to confirm sales in
connection with any offering of Tranche Registrable Securities, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.
(p) Micron shall take all such other actions either reasonably
necessary or desirable to permit the Registrable Securities held by TI to be
registered and disposed of in accordance with the methods of disposition
described herein.
4.5 Expenses.
--------
(a) All of the out-of-pocket costs and expenses incurred by Micron in
connection with any registration pursuant to Sections 4.1 and 4.2 shall (subject
to Section 4.7) be borne by TI; provided that TI shall not be required to
reimburse Micron for compensation of Micron's officers and employees, regular
audit expenses, and normal corporate costs incurred in connection with such
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registration. The costs and expenses of any such registration shall include,
without limitation, the reasonable fees and expenses of Micron's counsel and its
accountants and all other out-of-pocket costs and expenses of Micron incident to
the preparation, printing and filing of the registration statement and all
amendments and supplements thereto and the cost of furnishing copies of each
preliminary prospectus, each final prospectus and each amendment or supplement
thereto to underwriters, dealers and other purchasers of the securities so
registered, the costs and expenses incurred in connection with the qualification
of such securities so registered under the securities or "blue sky" laws of
various jurisdictions, the fees and expenses of Micron's transfer agent and all
other costs and expenses of complying with the provisions of this Section 4 with
respect to such registration (collectively, the "REGISTRATION EXPENSES").
(b) Micron shall pay all Registration Expenses incurred by Micron in
connection with any registration statements that are initiated pursuant to
Section 4.3 of this Agreement. TI shall pay all expenses incurred on its behalf
with respect to any registration pursuant to Section 4.3, including, without
limitation, any counsel for TI and all underwriting discounts and selling
commissions with respect to the Registrable Securities sold by it pursuant to
such registration statement.
4.6 Indemnification.
---------------
(a) In the case of any offering registered pursuant to this Section 4,
Micron hereby indemnifies and agrees to hold harmless TI (and its officers and
directors), any underwriter (as defined in the Securities Act) of Registrable
Securities offered by TI, and each Person, if any, who controls TI or any such
underwriter within the meaning of Section 15 of the Securities Act against any
losses, claims, damages or liabilities, joint or several, to which any such
Persons may be subject, under the Securities Act or otherwise, and to reimburse
any of such Persons for any legal or other expenses reasonably incurred by them
in connection with investigating any claims or defending against any actions,
insofar as such losses, claims, damages or liabilities arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the registration statement under which such Registrable Securities
were registered under the Securities Act pursuant to this Section 4, the
prospectus contained therein (during the period that Micron is required to keep
such prospectus current), or any amendment or supplement thereto, or the
omission or alleged omission to state therein (if so used) a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading, except
insofar as such losses, claims, damages or liabilities arise out of or are (i)
based upon any such untrue statement or omission or alleged untrue statement or
omission made in reliance upon information furnished to Micron in writing by TI
or any underwriter for TI specifically for use therein, or (ii) made in any
preliminary prospectus, and the prospectus contained in the registration
statement as declared effective or in the form filed by Micron with the SEC
pursuant to Rule 424 under the Securities Act shall have corrected such
statement or omission and a copy of such prospectus shall not have been sent or
otherwise delivered to such Person at or prior to the confirmation of such sale
to such Person.
(b) By requesting registration under this Section 4, TI agrees, if
Registrable Securities held by TI are included in the securities as to which
such registration is being effected, and
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each underwriter shall agree, in the same manner and to the same extent as set
forth in the preceding paragraph, to indemnify and to hold harmless Micron and
its directors and officers and each Person, if any, who controls Micron within
the meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several, to which any of such Persons may be subject under
the Securities Act or otherwise, and to reimburse any of such Persons for any
legal or other expenses incurred in connection with investigating or defending
against any such losses, claims, damages or liabilities, but only to the extent
it arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission of a material fact in any registration
statement under which the Registrable Securities were registered under the
Securities Act pursuant to this Section 4, any prospectus contained therein, or
any amendment or supplement thereto, which was based upon and made in conformity
with information furnished to Micron in writing by TI or such underwriter
expressly for use therein.
(c) Each party entitled to indemnification under this Section 4.6 (the
"INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at its own
expense, and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 4 unless such failure resulted in actual
detriment to the Indemnifying Party. No Indemnifying Party, (i) in the defense
of any such claim or litigation, shall, except with the consent of each
Indemnified Party, which consent shall not be unreasonably withheld, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation, or (ii) shall be liable for amounts paid in any settlement if such
settlement is effected without the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
4.7 Issuances by Micron or Other Holders. As to each registration or
------------------------------------
distribution referred to in Sections 4.1 and 4.2, additional shares of the
Common Stock to be sold for the account of Micron or other holders may be
included therein, provided that the inclusion of such securities in such
registration or distribution may be conditioned or restricted if, in the opinion
of the Demand/Tranche Managing Underwriters, marketing factors require a
limitation of the number of shares to be underwritten. The Registration
Expenses incurred by Micron, TI and any other holders participating in such
registration or distribution shall be borne by Micron, TI and any other holders
participating in such registration or distribution in proportion to the
aggregate number of shares to be sold by Micron, TI and such other holders.
4.8 Information by TI. TI shall furnish to Micron such information
-----------------
regarding TI in the distribution of Registrable Securities proposed by TI as
Micron may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Article
4.
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4.9 Market Standoff Agreements
--------------------------
(a) In connection with the public offering by Micron of any of its
securities, TI agrees that, upon the request of Micron or the underwriters
managing any underwritten offering of Micron's securities, TI shall agree in
writing (the "TI PUBLIC OFFERING LOCK-UP") that neither TI (nor any Affiliate of
TI) will, directly or indirectly, offer to sell, contract to sell, make any
short sale of, or otherwise sell, dispose of, loan, gift, pledge or grant any
options or rights with respect to, any securities of Micron (other than those
included in such registration statement, if any) now or hereafter acquired by TI
(or any Affiliate of TI) or with respect to which TI (or any Affiliate of TI)
has or hereafter acquires the power of disposition without the prior written
consent of Micron and such underwriters for such period of time (not to exceed
fourteen (14) days prior to the date such offering is expected to commence and
ninety (90) days after the date of the final prospectus delivered to the
underwriters for use in confirming sales in such offering) as may be requested
by Micron and the underwriters; provided, however, that neither TI (nor any
Affiliate of TI) shall be bound by such TI Public Offering Lock-Up more than
once during any twelve month period. Furthermore, TI agrees that, at the
request of Micron, TI shall agree in writing (the "TI POOLING TRANSACTION LOCK-
UP") that neither TI (nor any Affiliate of TI) shall, directly or indirectly,
offer to sell, contract to sell, make any short sale of, or otherwise sell,
dispose of, loan, pledge or grant any options or rights with respect to, any
securities of Micron now or hereafter acquired directly by TI (or any Affiliate
of TI) or with respect to which TI (or any Affiliate of TI) has or hereafter
acquires the power of disposition without the prior written consent of Micron
for such period of time as shall be necessary for Micron to complete any
business combination transaction in the form of a pooling of interests; provided
that Micron's independent accountants shall have concluded, after reasonable
inquiry, that, at the relevant time with respect to such proposed pooling of
interests transaction, TI is or was an "affiliate" of Micron for purposes of the
accounting rules governing pooling of interests transactions. TI agrees that
Micron may instruct its transfer agent to place stop-transfer notations in its
records to enforce the provisions of the TI Public Offering Lock-Up and the TI
Pooling Transaction Lock-Up contained in this Section 4.9(a).
(b) In connection with any proposed public offering by TI of any
Registrable Securities, Micron agrees that, upon the request of TI or the
underwriters managing any underwritten offering of TI's securities, Micron shall
agree in writing (the "MICRON PUBLIC OFFERING LOCK-UP") that neither Micron (nor
any Affiliate of Micron) will, directly or indirectly, offer to sell, contract
to sell, make any short sale of, or otherwise sell, dispose of, loan, gift,
pledge or grant any options or rights with respect to, any securities of Micron
(other than those included in such registration statement, if any, or grants of
stock options or issuances of Common Stock upon the exercise of outstanding
stock options under Micron's existing employee benefit plans) now or hereafter
acquired by Micron (or any Affiliate of Micron) or with respect to which Micron
(or any Affiliate of Micron) has or hereafter acquires the power of disposition
without the prior written consent of TI and such underwriters for such period of
time (not to exceed fourteen (14) days prior to the date such offering is
expected to commence and ninety (90) days) after the date of the final
prospectus delivered to the underwriters for use in confirming sales in such
offering) as may be requested by TI and the underwriters; provided, however,
that neither
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Micron (nor any Affiliate of Micron) shall bound by such Micron Public Offering
Lock-Up more than once during any 180-day period.
4.10 Termination. The provisions of this Article 4 shall terminate upon
-----------
the earlier to occur of: (i) five years after the date of the closing of
transactions contemplated by the Acquisition Agreement; and (ii) such time as TI
(and any Affiliates of TI) beneficially own in the aggregate less than 5,000,000
shares of Common Stock (assuming, for purposes of such calculation, the
conversion of all Convertible Notes then held by TI (and any Affiliates of TI)
into Common Stock).
SECTION 5
MISCELLANEOUS
5.1 Termination. This Agreement shall terminate upon the later to occur
-----------
of: (i) the tenth anniversary date of this Agreement and (ii) such time as TI
(together with all Affiliates of TI) beneficially owns in the aggregate Voting
Securities of Micron representing less than five percent (5%) of the Total
Voting Power of Micron or upon the closing or other completion of a Change in
Control of Micron.
5.2 Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of the State of New York as applied to contracts entered into solely
between residents of, and to be performed entirely within, such state.
5.3 Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective successors
and assigns. This Agreement may not be assigned by a party without the prior
written consent of the other party; provided that, without the consent of
Micron, TI may assign this Agreement (and the rights and obligations hereunder)
to any wholly-owned subsidiary in connection with a transfer of Voting
Securities of Micron to such Affiliate of TI pursuant to Section 3.1(b), and
without the consent of TI, Micron may assign all or part of this Agreement (and
the rights and obligations hereunder) to the successor or an assignee of all or
substantially all of Micron's business; provided that, in each case, such
assignee expressly assumes the relevant obligations of this Agreement (by a
written instrument delivered to the other party, in form and substance
reasonably acceptable to it) and, notwithstanding such assignment, the parties
hereto shall each continue to be bound by all of their respective obligations
hereunder. This Agreement is not intended and shall not be construed to create
any rights or remedies in any parties other than TI and Micron and no Person
shall assert any rights as third party beneficiary hereunder.
5.4 Entire Agreement; Amendment. This Agreement contains the entire
---------------------------
understanding and agreement between the parties with regard to the subject
matter hereof and thereof and supersedes all prior agreements and understandings
among the parties relating to the subject matter hereof. Neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by
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a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
5.5 Notices and Dates.
-----------------
(a) All notices, requests, demands, and other communications under
this Agreement shall be in writing and shall be delivered personally (including
by courier) or given by facsimile transmission to the parties at the following
addresses (or to such other address as a party may have specified by notice
given to the other pursuant to this provision) and shall be deemed given when so
received:
(i) if to Micron, to:
Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83716-9632
Attention: Roderic W. Lewis, Esq.
General Counsel
Telephone: (208) 368-4517
Facsimile: (208) 368-4540
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Larry W. Sonsini, Esq.
John A. Fore, Esq.
Telephone: (650) 493-9300
Facsimile: (650) 493-6811
(ii) if to TI, to:
Texas Instruments Incorporated
7839 Churchill Way - MS
Dallas, Texas 75215
Attention: Richard J. Agnich, Esq.
General Counsel
Telephone: (972) 480-5050
Facsimile: (972) 480-5061
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with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Paul R. Kingsley, Esq.
Telephone: (212) 450-4277
Facsimile: (212) 450-5515
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding business day in the place of receipt.
(b) In the event that any date provided for in this Agreement falls on
a Saturday, Sunday or legal holiday, such date shall be deemed extended to the
next business day.
5.6 Language Interpretation. In the interpretation of this Agreement,
-----------------------
unless the context otherwise requires, (a) words importing the singular shall be
deemed to import the plural and vice versa, (b) words denoting gender shall
include all genders, (c) references to persons shall include corporations or
other entities and vice versa, and (d) references to parties, sections,
schedules, paragraphs and exhibits shall mean the parties, sections, schedules,
paragraphs and exhibits of and to this Agreement, unless otherwise indicated by
the context.
5.7 Table of Contents; Titles; Headings. The table of contents and
-----------------------------------
section headings of this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this Agreement. All
references herein to Articles and Sections, unless otherwise identified, are to
Articles and Sections of this Agreement.
5.8 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement, and
shall become a binding agreement when one or more counterparts have been signed
by each party and delivered to the other party.
5.9 Severability. If any provision of this Agreement or portion thereof
------------
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
5.10 Injunctive Relief. TI, on the one hand, and Micron, on the other,
-----------------
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
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that the parties shall be entitled to an injunction or injunctions to prevent or
cure breaches of the provisions of this Agreement and to enforce specific
performance of the terms and provisions hereof in any court of the United States
or any state thereof having jurisdiction, this being in addition to any other
remedy to which they may be entitled at law or equity.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date aforesaid.
MICRON TECHNOLOGY, INC.,
a Delaware corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
TEXAS INSTRUMENTS INCORPORATED,
a Delaware corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
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EXHIBIT F
---------
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THIS NOTE IS SUBJECT TO THE TERMS OF A SECURITIES RIGHTS AND RESTRICTIONS
AGREEMENT, DATED AS OF ___________, 1998, AMONG THE COMPANY AND CERTAIN
OTHER PARTIES INCLUDING THE INITIAL HOLDER OF THIS NOTE. THE HOLDER OF
THIS NOTE BY ITS ACCEPTANCE HEREOF ACKNOWLEDGES AND AGREES THAT IT IS BOUND
BY THE TERMS OF SUCH AGREEMENT, INCLUDING, WITHOUT LIMITATION, A PROVISION
THAT IT MAY NOT OFFER, SELL, ASSIGN, TRANSFER, PLEDGE, ENCUMBER OR
OTHERWISE DISPOSE OF THIS NOTE OR ANY PORTION THEREOF OR INTEREST THEREIN
TO ANY PERSON OTHER THAN (A) THE COMPANY, OR (B) PURSUANT TO A SALE TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A.
NOT LATER THAN 10 DAYS AFTER THE DATE OF ISSUANCE OF THIS NOTE, INFORMATION
REGARDING THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE
AND YIELD TO MATURITY OF THIS NOTE WILL BE MADE AVAILABLE TO THE HOLDER OF
THIS NOTE UPON REQUEST TO THE CHIEF FINANCIAL OFFICER OF THE COMPANY.
MICRON TECHNOLOGY, INC.
SUBORDINATED PROMISSORY NOTE
Due [Insert 7th Anniversary of Closing Date], 2005
SN-1 Boise, Idaho
$210,000,000 [Time/Date],
1998
FOR VALUE RECEIVED, the undersigned, MICRON TECHNOLOGY, INC., a Delaware
corporation (the "Company"), hereby promises to pay to the order of TEXAS
INSTRUMENTS INCORPORATED, a Delaware corporation (together with its successors
and assigns, "Holder" or "Holders"), the principal sum of Two Hundred Ten
Million Dollars ($210,000,000) on [Insert 7th Anniversary of Closing Date],
2005, with interest from the date hereof (or the last interest payment date as
to which interest has been paid, if earlier) on the unpaid balance
<PAGE>
at a rate of six and one-half percent (6.5%) per annum. Accrued interest shall
be payable semi-annually in arrears as provided in Section 2.1 hereof. Interest
shall be calculated based on a 365/366-day year and the actual days elapsed.
Payments of both principal and interest are to be made in lawful money of the
United States of America as provided herein.
This Note, together with any other substantially identical (except as
to denomination and name of the holder thereof) subordinated promissory notes of
the Company which may be issued from time to time upon partial transfer hereof,
are in an aggregate principal amount equal to $210,000,000 (collectively, the
"Notes"). As used herein, the term "Note" includes this Note and any Note issued
in exchange for this Note or in replacement hereof. Notes shall only be issued
in denominations of $10,000,000 or any integral multiple of $1,000,000 in excess
thereof.
Each Note shall be dated the date of its issuance, shall bear interest
from its date of issuance stated therein (or the last interest payment date as
to which interest had been paid (or the date of issuance of the first Note to
have been issued, if no interest has yet been paid), if earlier). The Notes
shall otherwise be substantially identical, except as to denomination and name
of the Holder thereof. The Notes shall be issued only in fully registered form
and shall each be substantially in the form hereof, appropriately completed. The
Notes may have such letters, numbers or other marks of identification and such
legends or endorsements not included hereon placed thereon as may be required to
comply with any law or with any rules made pursuant thereto or with the rules of
any securities exchange or governmental agency or as may, consistently herewith,
be determined by the Company, as conclusively evidenced by its execution of such
Notes.
The following is a statement of the rights of the Holder of this Note
and the conditions to which this Note is subject, and to which the Holder
hereof, by the acceptance of this Note, agrees:
1. Definitions. The following terms, as used herein, have the following
-----------
meanings:
"Bankruptcy Code" means Title 11 of the United States Code.
"Bankruptcy, Insolvency or Liquidation Proceeding" means (i) any case
commenced by or against the Company under any chapter of the Bankruptcy Code,
any other proceeding for the reorganization, recapitalization or adjustment or
marshaling of the assets or liabilities of the Company, any receivership or
assignment for the benefit of creditors relating to the Company or any similar
case or proceeding relative to the Company or its creditors, as such, in each
case whether or not voluntary, (ii) any liquidation, dissolution, marshaling of
assets or liabilities or other winding up of or relating to the Company, in each
case whether or not voluntary and whether or not involving bankruptcy or
insolvency, and (iii) any other proceeding of any type or nature in which Claims
against the Company generally are determined, proven or paid.
-2-
<PAGE>
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday,
which is not a day in which banking institutions in Boise, Idaho, Dallas, Texas
or New York, New York are authorized or obligated by law or executive order to
close.
"Claim" is used as defined in the Bankruptcy Code, whether or not, in the
context in which it appears, a case under the Bankruptcy Code is pending.
"Convertible Notes" means the 2005 Convertible Notes and the 2004
Convertible Notes.
"Designated Senior Debt" means the Company's obligations under any
particular Senior Debt in which the instrument creating or evidencing the same
or the assumption or guarantee thereof (or related agreements or documents to
which the Company is a party) expressly provides that such Senior Debt shall be
"Designated Senior Debt" for purposes of this Note (provided that such
instrument, agreement or other document may place limitations and conditions on
the right of such Senior Debt to exercise the rights of Designated Senior Debt).
"Holder" or "Holders" has the meaning given in the second paragraph hereof.
"Indenture" means that Indenture, dated as of June 15, 1997, between the
Company and Norwest Bank Minnesota, National Association, as trustee, together
with all amendments and supplements thereto.
"Note" and "Notes" have the meanings given in the preamble hereto.
"Person" shall mean and include an individual, a partnership, a corporation
(including a business trust), a joint stock company, a limited liability
company, an unincorporated association, a joint venture or other entity or a
governmental authority.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on, rent with
respect to, and all fees and other amounts payable in connection with, the
following, whether absolute or contingent, secured or unsecured, due or to
become due, outstanding on the date hereof or hereafter created, incurred or
assumed: (a) indebtedness of the Company evidenced by a credit or loan
agreement, note, bond, debenture or other written obligation, including without
limiting the generality of the foregoing the Convertible Notes, (b) all
obligations of the Company for money borrowed, (c) all obligations of the
Company evidenced by a note or similar instrument given in connection with the
acquisition of any businesses, properties or assets of any kind, (d) obligations
of the Company (i) as lessee under leases required to be capitalized on the
balance sheet of the lessee under generally accepted accounting principles, (ii)
as lessee under other leases for facilities, equipment or related assets,
whether or not capitalized, entered into or leased
-3-
<PAGE>
after the date hereof for financing purposes (as determined by the Company),
(iii) under any lease or related document (including a purchase agreement) that
provides that the Company is contractually obligated to purchase or cause a
third party to purchase the leased property, and (iv) under such lease or
related document to purchase or to cause a third party to purchase such leased
property, (e) all obligations of the Company under interest rate and currency
swaps, caps, floors, collars, hedge agreements, forward contracts, or similar
agreements or arrangements, (f) all obligations of the Company with respect to
letters of credit, bankers' acceptances or similar facilities (including
reimbursement obligations and standby or commitment fees with respect to any of
the foregoing), (g) all obligations of the Company issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable arising in the ordinary course of business), (h) all obligations of the
type referred to in clauses (a) through (g) above of another Person and all
dividends of another Person, the payment of which, in either case, the Company
has assumed or guaranteed (or in effect guaranteed through an agreement to
purchase or otherwise (including, without limitation, "take or pay" and similar
arrangements)), or for which the Company is responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor or otherwise, or which
is secured by a lien on property of the Company, and all obligations of the
Company with respect thereto, and (i) renewals, extensions, modifications,
replacements, restatements and refundings of, or any indebtedness or obligation
issued in exchange for, any such indebtedness or obligation described in clauses
(a) through (h) of this paragraph; provided, however, that Senior Debt shall not
-------- -------
include the Notes or any such indebtedness or obligation if the terms of such
indebtedness or obligation (or the terms of the instrument under which, or
pursuant to which it is issued) expressly provide that such indebtedness or
obligation is not superior in right of payment to the Notes.
"Subordinated Claims" means all present and future indebtedness and
obligations of every type and description arising under or in respect of the
Notes or other instrument, agreement, transaction, act or event in respect
thereof and all other Claims in any manner based on, arising from or related to
any such indebtedness or obligation, whether based on a contract or quasi-
contract or founded on a tort or arising by law or otherwise.
"2004 Convertible Notes" means the Company's 7% Convertible Subordinated
Notes due July 1, 2004 issued under the Indenture, as supplemented by the
Supplemental Indenture dated as of June 15, 1997, between the Company and
Norwest Bank Minnesota, National Association, as trustee.
"2005 Convertible Notes" means the Company's 6-1/2% Convertible
Subordinated Notes due _____, 2005 issued under the Indenture, as supplemented
by that certain supplemental indenture dated as of _____, 1998, between the
Company and Norwest Bank Minnesota, National Association, as trustee.
2. Repayments and Payments of Principal and Interest on Notes.
----------------------------------------------------------
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<PAGE>
2.1. Interest. Subject to the provisions of Section 6, interest is
--------
payable in arrears in cash on the last business day of each [Insert day and
month of 6-month anniversary of Closing Date] and [Insert day and month of
Closing Date] beginning [6-month anniversary of Closing Date]. Payment of all
amounts due under the Notes shall be made by mail to the registered address of
each Holder, or if such Holder shall elect, by wire transfer to the account
designated by such Holder of immediately available funds; provided, however,
-------- -------
that for any Holder to receive its interest or principal payments by wire
transfer, the Company must receive such Holder's written bank wire transfer
instructions by the record date (as defined below) for such payment. The Person
in whose name any Note is registered at the close of business on the third
business day prior to any interest or principal payment date (the "record date")
shall be entitled to receive the interest, if any, payable on such interest
payment date notwithstanding any transfer or exchange of such Note subsequent to
the record date and prior to such interest or principal payment date.
2.2. Optional Prepayments of Notes. Subject to the provisions of
-----------------------------
Section 6, the Company may, at its option, prepay all or, from time to time,
part of the principal amount of the Notes, without penalty or premium, together
with interest on the principal amount so prepaid accrued to (but not including)
the date fixed for such prepayment.
2.3. Allocation of Payments and Prepayments. Each payment or
--------------------------------------
prepayment of principal of less than the entire unpaid principal amount of the
Notes shall be allocated (in units of $1,000) by the Company among the Holders
of the Notes at the time outstanding, in proportion, as nearly as practicable,
to the respective aggregate unpaid principal amount of the Notes (not
theretofore called for prepayment) then held by them, respectively, with
adjustments, to the extent practicable, to equalize for any prior payments or
prepayments not made in such proportion.
2.4. Notice of Prepayment to Holders. Not less than three (3) nor
-------------------------------
more than ten (10) days prior to the date fixed for each optional prepayment,
the Company shall give notice thereof to the registered Holders of the Notes,
specifying the date fixed for prepayment and the aggregate principal amount to
be prepaid on such date. Such notice shall also contain instructions for the
delivery of the Notes by the Holders to the Company. Subject to the provisions
of Section 6, such notice shall be irrevocable.
2.5. Legal Holidays. In any case where any interest payment date or
--------------
maturity date is not a Business Day, then (notwithstanding any other provision
of the Notes), payment of interest or principal, as applicable, with respect to
the Notes need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date or Maturity Date, as the case may be.
-5-
<PAGE>
3. Certain Covenants of the Company.
--------------------------------
3.1. Existence. The Company will do or cause to be done all things
---------
necessary to preserve and keep in full force and effect its existence, provided
that this Section 3.1 shall not apply to a consolidation or merger of the
Company with or into another Person in which the Company is not the surviving
Person or conveyance, transfer or lease of the properties and assets of the
Company substantially as an entirety to another Person provided that the
transferee Person expressly assumes the due and punctual payment of the
principal and interest on all of the Notes and the performance or observance of
every covenant set forth in the Notes on the part of the Company to be performed
or observed.
3.2. Maintenance of Properties. The Company will cause all
-------------------------
properties used or useful in the conduct of its business to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as, and to the extent,
in the judgment of the Company may be necessary so that the business carried on
in connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall prevent the Company
from discontinuing the operation or maintenance of any of such properties if
such discontinuance is, in the judgment of the Company, desirable in the conduct
of its business and not disadvantageous in any material respect to the Holders.
3.3. Payment of Taxes and Other Claims. The Company will pay or
---------------------------------
discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or upon the income, profits or property of the Company,
and (b) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien upon the property of the Company; provided, however,
-------- -------
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim (i) whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings or (ii) if the failure to pay or discharge would not have a material
adverse effect on the assets, business, operations, properties or condition
(financial or otherwise) of the Company and its subsidiaries, taken as a whole.
3.4. 144A Information. For so long as any Notes remain outstanding,
----------------
if the Company is not subject to Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company will furnish to Holders of Notes and to prospective
purchasers of such Notes designated by such Holders the information required to
be delivered pursuant to 144A(d)(4) under the Securities Act to permit
compliance with Rule 144A under the Securities Act in connection with resales of
Notes.
4. Events of Default; Acceleration.
-------------------------------
4.1. Events of Default. The occurrence of any of the following
-----------------
events shall constitute an "Event of Default" with respect to the Notes:
-6-
<PAGE>
(a) the Company defaults in the payment of the principal of any Note
when the same becomes due and payable at maturity or otherwise (other than a
default in the payment of principal resulting from application of Section 6
hereof); or
(b) the Company defaults in the payment of interest on any Note (other
than a failure to pay interest resulting from application of Section 6 hereof)
for 30 days after the same becomes due and payable; or
(c) the Company defaults in the performance of or breaches any
covenant or warranty of the Company in this Note (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of such default or breach for
a period of 60 days after there has been given, by registered or certified mail,
to the Company by the Holders of at least 25% in principal amount of the Notes
at that time outstanding a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder;
(d) any event or condition occurs which results in the acceleration of
the maturity of any indebtedness under any bond, debenture, note or other
evidence of indebtedness for money borrowed having an aggregate principal amount
in excess of $50,000,000 or the Company fails to pay any such indebtedness at
the final maturity thereof, and such indebtedness is not discharged, or such
acceleration is not rescinded or annulled, within a period of 30 days after
there has been given, by registered or certified mail, to the Company by the
Holders of at least 25% in principal amount of the Notes at that time
outstanding a written notice specifying such acceleration or failure to pay and
stating that such notice is a "Notice of Default" hereunder; provided, however,
-------- -------
that if any such failure, default or acceleration shall thereafter cease or be
cured, waived, rescinded or annulled, then the Event of Default hereunder by
reason thereof shall be deemed likewise to have been thereupon cured,
notwithstanding any receipt by the Company of a Notice of Default with respect
thereto; or
(e) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 90 consecutive days; or
(f) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the
-7-
<PAGE>
consent by it to the entry of a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking reorganization or
relief under any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the admission
by it in writing of its inability to pay its debts generally as they become due,
or the taking of corporate action by the Company in furtherance of any such
action.
4.2. Acceleration. In the event an Event of Default has occurred and
------------
is continuing, subject to the provisions of Section 6, the Holder or Holders of
25% or more in principal amount of the Notes at the time outstanding at its or
their option may, by written notice or notices to the Company, declare the Notes
due and payable, whereupon the same shall forthwith mature and become due and
payable together with interest accrued thereon, without presentment, demand,
protest or notice, all of which are hereby waived; provided, however, that such
acceleration shall be automatic without the necessity of any such notice in the
case of Events of Default under clause (e) or (f) above.
4.3. Waiver of Past Defaults. The Holders of not less than a
-----------------------
majority in principal amount of the outstanding Notes may on behalf of the
Holders of the Notes waive any past default thereunder and its consequences,
except a default in the payment of principal of or any interest on the Note.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for all purposes;
but no such waiver shall extend to any subsequent or other default or impair any
right consequent thereon.
4.4. Rescission and Annulment. At any time after a declaration of
------------------------
acceleration with respect to the Notes has been made and before a judgment or
decree for payment of the money due has been obtained, the Holders of a majority
in principal amount of the outstanding Notes, by written notice to the Company,
may rescind and annul such declaration and its consequences if the Company has
paid all overdue interest on all Notes and the principal of any Notes which has
become due otherwise than by such declaration of acceleration and all Events of
Default with respect to the Notes, other than the non-payment of the principal
of Notes which have become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 4.3.
5. Remedies. Subject to the provisions of Section 6 hereof, upon the
--------
acceleration of the amounts due under the Notes in accordance with Section 4 or
if such amounts remain unpaid after the maturity date of the Notes, any Holder
may proceed to protect and enforce any right, power or remedy granted to it
under applicable law. If any Holder of any Note or holder of any other
indebtedness of the Company gives any notice or takes any other action in
respect of a claimed de fault, the Company will forthwith give written notice
thereof to all Holders of the Notes at the time outstanding describing the
notice or action and the nature of the claimed default. No course of
-8-
<PAGE>
dealing and no delay on the part of any Holder of any Note in exercising any
right, power or remedy will operate as a waiver thereof or otherwise prejudice
such Holder's rights, powers or remedies. No right, power or remedy conferred
hereby is exclusive of any other right, power or remedy referred to herein or
now or hereafter available at law, in equity, by statute or otherwise.
6. Subordination of Notes.
-----------------------
6.1. Subordination. The Company hereby agrees and each Holder by its
-------------
acceptance of this Note agrees that the Subordinated Claims are and shall be
postponed, subordinated and junior in right of payment to the prior payment in
full of all Senior Debt on the terms and conditions herein set forth.
6.2. Permitted Payments; Deferral of Payments. So long as there
----------------------------------------
shall not have occurred and be continuing (i) a default in the payment of
principal, premium, if any, or interest (including a default under any
repurchase or redemption obligation) or other amounts with respect to any Senior
Debt or (ii) any other event of default which has been declared in writing, or
is automatically effective in the case of Bankruptcy, Insolvency or Liquidation
Proceedings, with respect to any Designated Senior Debt (as such event of
default is defined therein or in the instrument under which it is outstanding)
and of which the Holder has received a notice (a "Blockage Notice") from the
holders of such Designated Senior Debt (each of the events specified in clause
(i) or clause (ii), a "Senior Default"), the Company shall be permitted to make,
and each Holder to accept and receive, regularly scheduled payments of principal
and accrued interest under this Note and any prepayment of principal that the
Company has decided to make, as heretofore set forth. Notwithstanding any
provision to the contrary contained in this Note, the Company shall not make,
and no Holder shall demand, accept, receive or retain, any payment or
distribution of any kind or character, whether in cash, property, securities or
otherwise, on account or in respect of any Subordinated Claim after a Senior
Default has occurred or deferral of interest on any Convertible Notes for a
period of time (a "Deferral Period") in accordance with the terms thereof has
occurred. Payments due under the Notes may be resumed (x) in the case of a
deferral of interest, after the end of a Deferral Period (such payment to resume
as set forth in the next paragraph of this Note), and (y) in the case of
defaults referred to in clauses (i) and (ii) above, upon the earlier of:
(A) the date upon which the default is cured or waived or ceases to exist,
or
(B) in the case of a default referred to in clause (ii) above, the date
which is 179 days after the Blockage Notice is received,
unless this Section 6.2 otherwise prohibits the payment at the time of such
payment (including, without limitation, as a result of a payment default with
respect to the applicable Senior Debt as a consequence of the acceleration of
the maturity thereof or otherwise).
If a Deferral Period shall occur, interest payable on all of the Notes on
regular payment dates occurring during such Deferral Period shall be deferred
and the Company shall be responsible for
-9-
<PAGE>
the payment of, and the Company shall pay to the Person in whose name this Note
is registered at the close of business on the record date immediately preceding
the regular payment date hereunder next occurring after the termination of the
Deferral Period, all interest then accrued and unpaid together with, to the
extent permitted by law, interest thereon (compounded semi-annually on regular
payment dates) at the rate specified for the Notes. The foregoing provisions
shall apply during successive Deferral Periods with respect to the 2004
Convertible Notes and the 2005 Convertible Notes. The Company shall provide to
the Holders written notice of the occurrence of any Deferral Period at the time
notice thereof is given to the trustee under the Indenture, provided that any
failure to do so shall not affect the deferral of interest payments which would
occur pursuant to the terms hereof.
6.3. Prior Payment to Senior Debt Upon Acceleration. In the event
----------------------------------------------
that any Notes are declared due and payable before their stated maturity, then
and in such event the Holders of the Senior Debt outstanding at the time such
Notes so become due and payable shall be entitled to receive payment in full in
cash or other payment satisfactory to the Holders of Senior Debt of all amounts
due or to become due on or in respect of all Senior Debt before the Holders of
the Notes are entitled to receive any payment by the Company on account of any
Subordinated Claim. If the payment of Notes is accelerated because of an Event
of Default, the Company shall promptly notify Holders of Senior Debt of the
acceleration.
The provisions of this Section 6.3 shall not apply to any payment
with respect to which Section 6.4 would be applicable.
6.4. Bankruptcy, Insolvency or Liquidation Proceedings. In the event
-------------------------------------------------
of any Bankruptcy, Insolvency or Liquidation Proceeding:
(a) Priority of Payment. All Senior Debt shall be paid in full
-------------------
in cash (but excluding indemnification obligations which are then contingent and
as to which no payment is then due and no claim or demand has then been made)
before any Holder shall be entitled to receive any payment or distribution of
any kind or character, whether in cash, property, securities or otherwise, in
respect of this Note in such Bankruptcy, Insolvency or Liquidation Proceeding.
(b) Payments and Distributions on Subordinated Claims. Each
-------------------------------------------------
holder of Senior Debt shall be entitled to receive any payment or distribution
of any kind or character, whether in cash, property, securities or otherwise
(including, without limitation, any such payment or distribution which may
become payable or deliverable by reason of the payment of any other claim
against the Company being subordinated to the payment of the Subordinated
Claims), that may become payable or deliverable to Holders on account or in
respect of any Subordinated Claim, for application to the payment of all Senior
Debt, until all holders of Senior Debt have received payment in full in cash of
all Senior Debt (but excluding indemnification obligations which are then
contingent and as to which no payment is then due and no claim or demand has
then been made).
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<PAGE>
(c) Delivery and Application. All such payments and distributions on
------------------------
account or in respect of Subordinated Claims shall be delivered by the debtor,
trustee, receiver, disbursing agent or other Person making such payment or
distribution in such Bankruptcy, Insolvency or Liquidation Proceeding directly
to the holders of Senior Debt. If such payment or distribution consists of any
property or securities other than cash, (i) such payment or distribution shall
not be deemed applied to the payment of Senior Debt at any adjudicated or
imputed value and (ii) such payment or distribution and all other and future
non-cash payments and distributions on account or in respect of Subordinated
Claims shall be delivered to and held by the holders of Senior Debt, until cash
proceeds from such non-cash payments and distributions have been received by the
holders of Senior Debt in an amount sufficient (with any other cash paid or
distributed to them by or on behalf of the Company) to pay, in full and in cash,
all of the Senior Debt (but excluding indemnification obligations which are then
contingent and as to which no payment is then due and no claim or demand has
then been made).
(d) Proof of Claim.
--------------
(1) If any Holder fails to file a proof of claim or other statement or
demand in respect of its Subordinated Claims in such Bankruptcy, Insolvency or
Liquidation Proceeding prior to the 30th day preceding any bar date or other
deadline for filing a proof of claim or other such statement or demand therein,
or if any such proof of claim, statement or demand filed by any Holder prior to
such day is in any respect inadequate or insufficient (in the good faith opinion
of any holder of Senior Debt), then each holder of Senior Debt shall have the
right, but not the obligation, to execute and deliver (in the name of such
Holder or in its own name but on behalf of such Holder, as such holder of Senior
Debt may elect) and file in such Bankruptcy, Insolvency or Liquidation
Proceeding any proof of claim, statement or demand which such holder of Senior
Debt may determine to be required or appropriate in respect of such Subordinated
Claim.
(2) To the extent necessary or reasonably appropriate to permit the
holders of Senior Debt to exercise the right granted to them under this Section
6.4(d), each Holder hereby constitutes and appoints each holder of Senior Debt
as its attorney-in-fact and agent, with full power of substitution and
delegation, to execute, deliver and file any such proof of claim, statement or
demand as herein provided, and the power of attorney granted herein (being
coupled with an inter est) is and shall be in all respects irrevocable.
(3) No holder of Senior Debt shall, by executing, delivering or filing
any such proof of claim, statement or demand, become liable or responsible in
any respect for the legality, adequacy or sufficiency thereof.
(4) Each holder of Senior Debt filing any such proof of claim,
statement or demand shall deliver or mail a copy thereof to the Company at least
10 days prior to filing such proof of claim, statement or demand, but the
failure to deliver or mail such copy shall not in any respect (i) impose any
liability on such holder or upon any other holder of Senior Debt or (ii)
destroy, affect or impair the subordination provided hereby or any right, power
or benefit hereby
-11-
<PAGE>
granted to any holder of Senior Debt. The Company shall, promptly after its
receipt thereof, deliver or mail a copy of such proof of claim, statement or
demand to each Holder.
6.5. Enforcement Rights. No Holder shall have any right to enforce
------------------
any Subordinated Claim, institute or attempt to institute any Bankruptcy,
Insolvency or Liquidation Proceeding against the Company or otherwise to take
any action against the Company or the Company's property during any periods
payments on or distributions in respect of Subordinated Claims are prohibited
under Section 6.2, 6.3 or 6.4 hereof.
6.6. Turnover. If and in each instance that any Holder receives any
--------
payment or distribution of any kind or character, whether in cash, property,
securities or otherwise (including, without limitation, any such payment or
distribution which may become payable or deliverable by reason of the payment of
any other Claim against the Company being subordinated to the payment of any
Subordinated Claim) on account or in respect of any Subordinated Claim which
payment or distribution is prohibited by Section 6.2, 6.3 or 6.4, at any time
when any Senior Debt or any commitment to extend credit which would constitute
Senior Debt is outstanding, or at any time when payment of interest on any
Convertible Notes is deferred as aforesaid, then and in each such event:
(a) Transfer and Delivery. Each Holder shall forthwith pay
---------------------
over, transfer and deliver such payment or distribution to the holders of Senior
Debt, whether or not any Bankruptcy, Insolvency or Liquidation Proceeding is
then pending, until the holders of Senior Debt have received payment in full and
in cash of all outstanding Senior Debt (but excluding indemnification
obligations which are then contingent and as to which no payment is then due and
no claim or demand has then been made).
(b) Held in Trust. Each Holder hereby agrees to hold in trust
-------------
for the holders of Senior Debt, in the identical form received (except for any
necessary endorsement to the holders of Senior Debt) and as trustee of an
express trust, all payments and distributions required to be paid over,
transferred and delivered pursuant to this Section 6.6.
6.7. Subrogation. Subject to the prior payment in full and cash of
-----------
any and all Senior Debt (but excluding indemnification obligations which are
then contingent and as to which no payment is then due and no claim or demand
has then been made), each Holder shall be subrogated to the rights of the
holders of such Senior Debt to receive payments and distributions, whether in
cash, property, securities or otherwise, applicable to the Senior Debt until
such Holder's Subordinated Claim is paid in full. For such purposes:
(a) Postponement of Subrogation. No right of subrogation shall
---------------------------
be available to or may be enforced by any Holder, unless and until the payment
in full and in cash of all outstanding Senior Debt (but excluding
indemnification obligations which are then contingent and as to which no payment
is then due and no claim or demand has then been made).
-12-
<PAGE>
(b) No Representation, Warranty or Responsibility. No holder of any
---------------------------------------------
Senior Debt makes any representation or warranty, or shall otherwise have any
responsibility, as to whether any such right of subrogation is accorded or
available to any Holder or is enforceable by it in any particular circumstance.
(c) No Duty; No Exoneration. No holder of any Senior Debt shall have
-----------------------
any duty to any Holder to ensure, perfect, protect, enforce or maintain any
right of subrogation that might otherwise be accorded or available to or
enforceable by such Holder. The subordination provided herein and the rights of
the holders of Senior Debt hereunder shall remain fully enforceable on the terms
set forth herein, regardless of any act, omission or circumstance (whether or
not attributable to any holder of any Senior Debt and whether or not wrongful)
which does or might in any manner or in any respect destroy, limit, reduce,
affect or impair any right of subrogation otherwise accorded or available to or
enforceable by any Holder. Each holder of any Senior Debt shall remain utterly
free to take or fail to take any and all actions in respect of any Senior Debt
or any Person liable therefor or any collateral security therefor (including,
without limitation, each and all of the acts, omissions and matters described in
Section 6.8), without exonerating Holders, even if any right of subrogation is
destroyed, limited, reduced, affected or impaired thereby.
(d) Disallowed Senior Debt. The subordination provided herein and the
----------------------
rights of the holders of Senior Debt hereunder shall be fully enforceable as to
all Senior Debt which is not allowed, allowable or enforceable in any
Bankruptcy, Insolvency or Liquidation Proceeding, even if and even though no
right of subrogation is available in respect of such Senior Debt.
(e) Payment of Senior Debt. For purposes of enforcing any right of
----------------------
subrogation on the terms set forth in this Section 6.7, no payment or
distribution on account of any Subordinated Claim arising in respect of this
Note applied to the payment of Senior Debt shall, as between the Company and
Holders and to the extent of the payment or distribution so applied, discharge
the liability of the Company for the payment of such Senior Debt and, to this
end, the Company shall remain obligated to pay such Senior Debt in full
notwithstanding any such application.
6.8. Subordination Not Prejudiced, Affected or Impaired. No right of
--------------------------------------------------
any present or future holder of any Senior Debt to enforce subordination as
provided in this Note shall at any time in any way be prejudiced, affected or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act on the part of any holder of Senior Debt or by any breach or
default by the Company in the performance or observance of any promise, covenant
or obligation enforceable by any Holder, regardless of any knowledge thereof
that any holder of Senior Debt may have or otherwise be charged with.
(a) Certain Acts, Omissions and Events. Without in any way limiting
----------------------------------
the generality of the foregoing, each holder of any Senior Debt may at any time
and from time to time, without the consent of or notice to Holder, without
incurring any responsibility or liability to any
-13-
<PAGE>
Holder and without in any manner prejudicing, affecting or impairing the
subordination provided herein or the obligations of Holders to the holders of
Senior Debt:
(1) Make loans and advances to the Company or issue, guaranty or
obtain letters of credit for the account of the Company or otherwise extend
credit to the Company, in any amount and on any terms, whether pursuant to a
commitment or as a discretionary advance and whether or not any default or event
of default or failure of condition is then continuing;
(2) Change the manner, place or terms of payment or extend the time of
payment of, or renew or alter, compromise, accelerate, extend or refinance, any
Senior Debt or any agreement, guaranty, lien or obligation of the Company or any
other Person in any manner related thereto, or otherwise amend, supplement or
change in any manner any Senior Debt or any such agreement, guaranty, lien or
obligation;
(3) Increase or reduce the amount of any Senior Debt or the interest
accruing thereon;
(4) Release or discharge any Senior Debt or any guaranty thereof or
any agreement or obligation of the Company or any other Person with respect
thereto;
(5) Take or fail to take any collateral security for any Senior Debt
or take or fail to take any action which may be necessary or appropriate to
ensure that any lien upon any property securing any Senior Debt is duly
enforceable or perfected or entitled to priority as against any other lien or to
ensure that any proceeds of any property subject to any lien are applied to the
payment of any Senior Debt;
(6) Release, discharge or permit the lapse of any or all liens upon
any property at any time securing any Senior Debt;
(7) Exercise or enforce, in any manner, order or sequence, or fail to
exercise or enforce, any right or remedy against the Company or any collateral
security or any other Person or property in respect of any Senior Debt or lien
securing any Senior Debt or any right under this Note; or
(8) Sell, exchange, release, foreclose upon or otherwise deal with any
property that may at any time be subject to any lien securing any Senior Debt.
(b) No Release or Exoneration. No exercise, delay in exercising or failure
-------------------------
to exercise any right arising under this Section 6, no act or omission of any
holder of any Senior Debt in respect of the Company or any other Person or any
collateral security for any Senior Debt or any right arising under this Section
6, no change, impairment, or suspension of any right or remedy of any holder of
any Senior Debt, and no other act, failure to act, circumstance, occurrence or
event which, but for this provision, would or could act as a release or
exoneration of the
-14-
<PAGE>
obligations of any Holder hereunder shall in any way affect, decrease, diminish
or impair any of the obligations of any Holder under this Note or give any
Holder or any other Person any recourse or defense against any holder of Senior
Debt in respect of any right arising under this Section 6.
6.9. Reinstatement. If any payment or distribution at any time made
-------------
on account or in respect of any Senior Debt is thereafter rescinded, recovered,
set aside, avoided or required to be returned, then such Senior Debt and all
rights of the holder of such Senior Debt to enforce subordination as set forth
herein shall be automatically and unconditionally reinstated, as fully as if
such payment or distribution had never been made.
70 Amendments and Waivers. Neither this Note nor any term hereof may be
----------------------
amended or waived orally or in writing, except that any term of the Notes may be
amended and the observance of any term of the Notes may be waived (either
generally or in a particular instance and either retroactively or
prospectively), and such amendment or waiver shall be applicable to all of the
Notes, upon the approval of the Company and the Holders of fifty percent (50%)
or more of the outstanding principal amount of all then outstanding Notes;
provided, however, that any amendment to (i) the outstanding principal amount of
-------- -------
the Notes, (ii) the rate of interest borne by the Notes, (iii) the date of
maturity or interest payment dates of the Notes or (iv) this Section 7 shall
require the approval of the Holder of each Note to which such amendment shall
apply. The Company will not amend any provision of any other Note in a manner
favorable to any Holder thereof unless a similar amendment is made or offered
with respect to all of the Notes. Each Holder of this Note by its acceptance
hereof acknowledges and agrees that the subordination provisions of this
instrument are for the benefit of the holders of the Senior Debt and that,
accordingly, no provision of Section 6 hereof may be amended or otherwise
modified without the prior written consent of each holder of Senior Debt at such
time outstanding.
80 Notices. Any notice or communication to the Company shall be given in
-------
writing and delivered in person or by overnight courier or mailed by
certified or registered mail, return receipt requested, addressed as follows:
Micron Technology, Inc.
8000 South Federal Way
P. O. Box 6
Boise, Idaho 8379-9632
Attention: General Counsel.
Any notice or communication to a Holder shall be given in writing and delivered
by telecopier, in person or by overnight courier or mailed by certified or
registered mail, return receipt requested, addressed to the address of the
Holder in the Note Register on the date of such notice or communication. The
address of Seller, as original Holder, is as follows:
Texas Instruments Incorporated
7839 Churchill Way - MS
-15-
<PAGE>
Dallas, Texas 75215
Attention: General Counsel
Any such notice or communication shall be effective (x) when received, if
delivered in person, (y) on the next business day, if delivered by overnight
courier and (z) when received, if delivered by mail.
90 Restrictions on Transfer. This Note has not been registered under the
------------------------
Securities Act, or the securities laws of any state or other jurisdiction.
Neither this Note nor any interest or participation herein may be reoffered,
sold, assigned, transferred, pledged, encumbered or otherwise disposed of in the
absence of such registration or unless such transaction is exempt from, or not
subject to, registration. Each Holder by its acceptance of this Note agrees
that it shall not offer, sell, assign, transfer, pledge, encumber or otherwise
dispose of this note or any portion thereof or interest therein other than in a
minimum denomination of $10,000,000 principal amount (or any integral multiple
of $1,000,000 in excess thereof) and then only (a) to the Company, or (b) for so
long as the securities are eligible for resale pursuant to Rule 144A, pursuant
to a sale to a Person it reasonably believes is a "qualified institutional
buyer" as defined in Rule 144A.
100 Transfer Agent and Registrar; Transfers of Notes.
-------------------------------------------------
10.1. Company Own Transfer Agent and Note Registrar. The Company shall
---------------------------------------------
serve as its own agent for the transfer and exchange of Notes and registrar to
keep a register or registers in which, subject to such reasonable regulations as
it may prescribe, the Company will provide for the registration of Notes and the
registration of transfers of Notes (the "Note Register"). The Note Register will
be maintained at the office of the Company set forth in Section 8 hereof.
10.2. Transfer of Notes. Upon presentation of any Note for
-----------------
registration of transfer at the office of the Company set forth in Section 8
hereof accompanied by (i) certification by the transferor that such transfer is
in compliance with the terms hereof and (ii) by a written instrument of transfer
in a form approved by the Company executed by the registered Holder, in person
or by such holder's attorney thereunto duly authorized in writing, and including
the name, address and telephone and fax numbers of the transferee and name of
the contact person of the transferee, such Note shall be transferred on the Note
Register, and a new Note of like tenor and bearing the same legends shall be
issued in the name of the transferee and sent to the transferee at the address
and c/o the contact person so indicated. Transfers and exchanges of Notes shall
be subject to such additional restrictions as are set forth in the legends on
the Notes and to such additional reasonable regulations as may be prescribed by
the Company. Successive registrations of transfers as aforesaid may be made
from time to time as desired, and each such registration shall be noted on the
Note Register. No service charge shall be made for any registration of transfer
or exchange of the Notes, but the Company may require payment of a sum
sufficient to cover any stamp or other tax or governmental charge in connection
therewith.
-16-
<PAGE>
10.3. Registered Holders Treated as Absolute Owners. The Company may
---------------------------------------------
deem and treat the Person in whose name any Note is registered on the Note
Register as the absolute owner of such Note (whether or not such Note shall be
overdue and notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving payment of or on account of the principal of and,
subject to the provisions of this Agreement, interest on such Note and for all
other purposes; and neither the Company nor any agent of the Company shall be
affected by any notice to the contrary. All such payments so made to any such
Person, or upon such Person's order, shall be valid, and, to the extent of the
sum or sums so paid, effectual to satisfy and discharge the liability for moneys
payable on any such Note.
10.4. Loss, Theft, Destruction or Mutilation of Note. Upon receipt by
----------------------------------------------
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of a Note, and in the case of loss, theft or
destruction, receipt of indemnity or security reasonably satisfactory to the
Company, and upon reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such Note, if
mutilated, the Company will deliver a new Note of like tenor and dated as of
such cancellation, in lieu of such Note.
110 Holder Representations. By its acceptance hereof, each Holder
----------------------
represents and warrants as follows:
11.1. Qualified Institutional Buyer. Such Holder is a "qualified
-----------------------------
institutional buyer" as such term is defined in Rule 144A under the Securities
Act. Such Holder has been advised that this Note has not been registered under
the Securities Act, or any state securities laws and, therefore, cannot be
resold unless it is registered under the Securities Act and applicable state
securities laws or unless an exemption from such registration requirements is
available. Such Holder is aware that the Company is under no obligation to
effect any such registration or to file for or comply with any exemption from
registration. Such Holder has not been formed solely for the purpose of making
this investment and is acquiring the Note for its own account, or for the
account of a qualified institutional buyer to whom notice is given that the
transfer is being made in reliance on Rule 144A, for investment, and not with a
view to, or for resale in connection with, the distribution thereof.
11.2. Access to Information. The initial Holder of this Note
---------------------
acknowledges that the Company has given such Holder access to the corporate
records and accounts of the Company and to all information in its possession
relating to the Company, has made its officers and representatives available for
interview by such Holder, and has furnished such Holder with all documents and
other information required for such Holder to make an informed decision with
respect to the acquisition of the Note.
120 General. This Note shall be governed by and shall be construed and
-------
enforced in accordance with the laws of the State of New York.
MICRON TECHNOLOGY, INC.
-17-
<PAGE>
By____________________________
Name:
Title:
-18-
<PAGE>
EXHIBIT G
---------
This Supplemental Trust Indenture, dated as of June 15, 1997 (the
"Supplemental Indenture"), between Micron Technology, Inc., a corporation duly
organized and existing under the laws of the State of Delaware (the "Company"),
and Norwest Bank Minnesota, National Association, a national banking association
organized and existing under the laws of the United States of America, as
Trustee (the "Trustee"), supplementing that certain Indenture, dated as of June
15, 1997, between the Company and the Trustee (the "Indenture").
Recitals
A. The Company has duly authorized the execution and delivery of the
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes, or other evidences of indebtedness to be issued in one or
more series as provided for in the Indenture.
B. The Indenture provides that the Securities of each series shall be in
substantially the form set forth in the Indenture, or in such other form as may
be established by or pursuant to a Board Resolution or in one or more
supplemental indentures thereto, in each case with such appropriate insertions,
omissions, substitutions, and other variations as are required or permitted by
the Indenture, and may have such letters, numbers, or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined to be required by the officers executing
such securities, as evidenced by their execution thereof.
C. The Company and the Trustee have agreed that the Company shall issue
and deliver, and the Trustee shall authenticate, Securities denominated "7%
Convertible Subordinated Notes due July 1, 2004" (the "Notes") pursuant to the
terms of this Supplemental Indenture and substantially in the form set forth
below, in each case with such appropriate insertions, omissions, substitutions,
and other variations as are required or permitted by the Indenture and this
Supplemental Indenture, and with such letters, numbers, or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of such Securities.
[Form of Face of Security]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
<PAGE>
MICRON TECHNOLOGY, INC.
7% Convertible Subordinated Note due July 1, 2004
No. _________ $_____________
Micron Technology, Inc., a corporation duly organized and existing under
the laws of Delaware (herein called the "Company," which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ________________, or registered assigns, the
principal sum of ___________________ Dollars on July 1, 2004 and to pay interest
thereon from June 24, 1997 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on January 1
and July 1 in each year, commencing January 1, 1998, at the rate of 7% per
annum, until the principal hereof is paid or made available for payment. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the December 15 or June 15 (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date, subject to the right of the Company
to defer interest during an Extension Period. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Securities of this
series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture.
So long as no Event of Default under the Indenture has occurred and is
continuing, the Company shall have the right at any time during the term of the
Securities to defer interest payments from time to time by extending the
interest payment period for successive periods (each, an "Extension Period") not
exceeding 4 consecutive semi-annual interest payment periods for each such
period; provided, that no Extension Period may extend beyond the Stated Maturity
--------
of the Securities. At the end of each Extension Period, the Company shall be
responsible for the payment of, and the Company shall pay to the Person in whose
name this Security is registered at the close of business on the Regular Record
Date next preceding such payment date all interest then accrued and unpaid
together with interest thereon compounded semi-annually at the rate specified
for the Securities to the extent permitted by applicable law; provided, that
--------
during any Extension Period, the Company shall not, and shall not allow any of
its Subsidiaries to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Company's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees of indebtedness for money
2
<PAGE>
borrowed) of the Company that rank pari passu with or junior to the Notes (other
than (a) any dividend, redemption, liquidation, interest, principal or guarantee
payment by the Company where the payment is made by way of securities (including
capital stock) that rank pari passu with or junior to the securities on which
such dividend, redemption, interest, principal or guarantee payment is being
made, (b) purchases of the Company's Common Stock related to the issuance of the
Company's Common Stock under any of the Company's benefit plans for its
directors, officers or employees, (c) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one series or class of
the Company's capital stock for another series or class of the Company's capital
stock, and (d) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged). Prior to the termination of
any such Extension Period, the Company may further extend such Extension Period;
provided, that such Extension Period together with all previous and further
--------
extensions thereof may not exceed 4 consecutive semi-annual interest payment
periods and may not extend beyond the Stated Maturity of the Securities. Upon
the termination of any Extension Period and the payment of all amounts then due,
the Company may commence a new Extension Period, subject to the above
requirements. No interest during an Extension Period shall be due and payable
except at the end thereof.
The Company shall give written notice to the Trustee of its election to
begin an Extension Period at least one Business Day prior to the earlier of (i)
the Regular Record Date for the Interest Payment Date on the Securities that
would have been payable but for the election to begin such Extension Period or
(ii) if the Securities are listed on the New York Stock Exchange, Inc. ("NYSE")
or other stock exchange or quotation system, the date the Company is required to
give notice to the NYSE or other applicable self-regulatory organization or to
Holders of the Securities of the Regular Record Date or the date such interest
is payable.
Payment of the principal of (and premium, if any) and any interest on this
Security will be made at Corporate Trust Office of the Trustee in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
-------- -------
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
MICRON TECHNOLOGY, INC.
By:
-------------------------------
Title:
Attest:
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.
Dated: NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
As Trustee
By:
--------------------------------
Authorized Officer
FORM OF REVERSE OF SECURITY
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of June 15, 1997 (herein called the
"Indenture," which term shall have the meaning assigned to it in such
instrument), between the Company and Norwest Bank Minnesota, National
Association, as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), and reference is hereby made to the
Indenture and all indentures supplemental thereto for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, the holders of Senior Debt and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof, limited in aggregate principal amount to $500,000,000.
The Securities will not be subject to redemption prior to July 2, 1999 and
will be redeemable on and after such date at the option of the Company, in whole
or in part, upon not less than 20 nor more than 60 days notice to the Holders,
at the Redemption Prices (expressed as percentages of the principal amount) set
forth below; provided, however, that the Securities will not be redeemable
-------- -------
following July 2, 1999 and before July 3, 2001 unless the Closing Price Per
Share of the Company's
4
<PAGE>
Common Stock is at least 130% of the Conversion Price for at least 20 Trading
Days within a period of 30 consecutive Trading Days ending within five Trading
Days of the call for redemption.
The Redemption Price (expressed as a percentage of principal amount) is as
follows for the 12-month periods beginning on July 1 of the following years
(beginning on July 2, 1999, and ending on June 30, 2000, in the case of the
first such period):
Year Redemption Price
---- ----------------
1999............... 105%
2000............... 104%
2001............... 103%
2002............... 102%
2003............... 101%
and thereafter is equal to 100% of the principal amount, in each case together
with accrued and unpaid interest (including any unpaid interest, compounded
semi-annually, that has accrued during any Extension Period) to, but excluding,
the Redemption Date; provided, however, that interest installments whose Stated
-------- -------
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.
In the event of redemption of this Security in part only, a new Security or
Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.
If a Change in Control occurs, the Holder of this Security, at the Holder's
option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion of
the principal amount hereof that is $1,000 or any integral multiple of $1,000 in
excess thereof, provided that the portion of the principal amount of this
--------
Security to be Outstanding after such repurchase is at least equal to $1,000)
for cash at a Repurchase Price equal to 100% of the principal amount thereof
plus interest accrued to, but excluding, the Repurchase Date (including any
unpaid interest, compounded semi-annually, that has accrued during any Extension
Period). At the option of the Company, the Repurchase Price may be paid in cash
or, subject to the conditions provided in the Indenture, by delivery of shares
of Common Stock having a fair market value equal to the Repurchase Price. For
purposes of this paragraph, the fair market value of shares of Common Stock
shall be determined by the Company and shall be equal to 95% of the average of
the Closing Prices Per Share for the five consecutive Trading Days immediately
preceding the second Trading Day prior to the Repurchase Date. Whenever in this
Security there is a reference, in any context, to the principal of any Security
as of any time, such reference shall be deemed to include reference to the
Repurchase Price payable in respect of such Security to the extent that such
Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Security shall not be
construed as excluding the Repurchase Price so payable in those provisions of
this Security when such express mention is not
5
<PAGE>
made; provided, however, that, for the purposes of the succeeding paragraph,
-------- -------
such reference shall be deemed to include reference to the Repurchase Price only
to the extent the Repurchase Price is payable in cash.
The indebtedness evidenced by this Security is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Debt of the Company, and this Security
is issued subject to such provisions of the Indenture with respect thereto.
Each Holder of this Security, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on his or her
behalf to take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee as his or her attorney-
in-fact for any and all such purposes.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Security or certain restrictive covenants and Events of
Default with respect to this Security, in each case upon compliance with certain
conditions set forth in the Indenture.
Subject to the provisions of the Indenture, the Holder of this Security is
entitled, at its option, at any time on or before July 1, 2004 (except that, in
case this Security or any portion hereof shall be called for redemption or
submitted for repurchase, such right shall terminate with respect to this
Security or portion hereof, as the case may be, so called for redemption or
submitted for repurchase, as the case may be, at the close of business on the
first Business Day next preceding the date fixed for redemption or repurchase,
as the case may be, as provided in the Indenture unless the Company defaults in
making the payment due upon redemption or repurchase, as the case may be), to
convert the principal amount of this Security (or any portion hereof which is
$1,000 or an integral multiple thereof) into fully paid and non-assessable
shares of the Common Stock of the Company, as said shares shall be constituted
at the date of conversion, at the Conversion Rate of 14.8272 shares of Common
Stock for each $1,000 principal amount of Securities, or at the adjusted
Conversion Rate in effect at the date of conversion determined as provided in
the Indenture, upon surrender of this Security, together with the conversion
notice hereon duly executed, to the Corporate Trust Office of the Trustee
accompanied (if so required by the Company) by instruments of transfer, in form
satisfactory to the Company and to the Trustee, duly executed by the Holder or
by its duly authorized attorney in writing. Such surrender (other than during an
Extension Period) shall, if made during any period beginning at the close of
business on a Regular Record Date and ending at the opening of business on the
Interest Payment Date next following such Regular Record Date (unless this
Security or the portion being converted shall have been called for redemption on
a Redemption Date during the period beginning at the close of business on a
Regular Record Date and ending at the opening of business on the first Business
Day after the next succeeding Interest Payment Date, or if such Interest Payment
Date is not a Business Day, the second such Business Day), also be accompanied
by payment in funds acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount of this Security
then being converted. Subject to the aforesaid requirement for payment and, in
the case of a conversion after the Regular Record Date next preceding any
Interest Payment Date and on or before such Interest Payment Date, to the right
of the Holder of this Security (or any Predecessor Security) of record at such
Regular Record Date to
6
<PAGE>
receive an installment of interest (with certain exceptions provided in the
Indenture), no adjustment is to be made on conversion for interest accrued
hereon or for dividends on shares of Common Stock issued on conversion. If,
during any Extension Period, this Security (or portion hereof) called for
redemption is surrendered for conversion, any accrued and unpaid interest on
this Security (or portion hereof) as of the Interest Payment Date occurring on
or immediately preceding the conversion date for this Security shall be paid in
cash to the Holder surrendering such Security for conversion. The Company is not
required to issue fractional shares upon any such conversion, but shall make
adjustment therefor as provided in the Indenture. The Conversion Rate is subject
to adjustment as provided in the Indenture. In addition, the Indenture provides
that in case of certain consolidations or mergers to which the Company is a
party or the sale of substantially all of the assets of the Company, the
Indenture shall be amended, without the consent of any Holders of Securities, so
that this Security, if then outstanding, will be convertible thereafter, during
the period this Security shall be convertible as specified above, only into the
kind and amount of securities, cash and other property receivable upon the
consolidation, merger or sale by a holder of the number of shares of Common
Stock into which this Security might have been converted immediately prior to
such consolidation, merger or sale (assuming such holder of Common Stock failed
to exercise any rights of election and received per share the kind and amount
received per share by a plurality of non-electing shares). In the event of
conversion of this Security in part only, a new Security or Securities for the
unconverted portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of more than 50% in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time
7
<PAGE>
Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of Securities of this series at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
8
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of
this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -______________
TEN ENT - as tenants by the entireties
(Cust)
JT TEN- as joint tenants with right of Custodian_______________ under
Uniform survivorship and not
as tenants in common (Minor)
Gifts to Minors Act______________
(State)
Additional abbreviations may also be used though not in the above list.
CONVERSION NOTICE
To Micron Technology, Inc.:
The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of the
Company in accordance with the terms of the Indenture referred to in this
Security, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment for fractional shares and any
Securities representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If this Notice is being delivered (other than during an
Extension Period) on a date after the close of business on a Regular Record Date
and prior to the opening of business on the related Interest Payment Date
(unless this Security or the portion thereof being converted has been called for
redemption on a Redemption Date after the close of business on a Regular Record
Date and prior to the opening of business on the first Business Day after the
next succeeding Interest Payment Date, or if such Interest Payment Date is not a
Business Day, the next such Business Day), this Notice is accompanied by
payment, in funds acceptable to the Company, of an amount equal to the interest
payable on such Interest Payment Date of the principal of this Security to be
converted. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
hereto. Any amount required to be paid by the undersigned on account of interest
accompanies this Security.
Principal Amount to be Converted
(in an integral multiple of $1,000, if less
than all)
$ __________
9
<PAGE>
Dated: _______________ _______________________________________________
_______________________________________________
Signature(s) must be guaranteed by a qualified
guarantor institution if shares of Common Stock
are to be delivered, or Securities to be issued,
other than to and in the name of the registered
owner.
_______________________________________________
Signature Guaranty
Fill in for registration of shares of Common Stock and Security if to be
issued otherwise than to the registered Holder.
___________________________________________________
(Name) Social Security or Other Taxpayer
Identification Number
(Address)
10
<PAGE>
ELECTION OF HOLDER TO REQUIRE REPURCHASE
(1) Pursuant to Section 601 of the Supplemental Indenture, the undersigned
hereby elects to have this Security repurchased by the Company.
(2) The undersigned hereby directs the Trustee or the Company to pay it or
__________________ an amount in cash or, at the Company's election, Common Stock
valued as set forth in the Indenture, equal to 100% of the principal amount to
be repurchased (as set forth below), plus interest accrued to, but excluding,
the Repurchase Date (including any unpaid interest, compounded semi-annually,
that has accrued during any Extension Period), as provided in the Supplemental
Indenture.
Dated:______________
________________________________________
Signature(s)
Signature(s) must be guaranteed by an
Eligible Guarantor Institution with
membership in an approved signature
guarantee program pursuant to Rule 17Ad-15
under the Securities Exchange Act of 1943.
________________________________________
Signature Guaranteed
Principal amount to be repurchased
(an integral multiple of $1,000): _____________________________
Remaining principal amount following such repurchase
(not less than $1,000):________________________________________
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
11
<PAGE>
ARTICLE ONE
ISSUANCE OF NOTES.
Section 101 Issuance of Notes; Principal Amount; Maturity.
(a) On June 24, 1997, the Company shall issue and deliver to the Trustee,
and the Trustee shall authenticate, Notes substantially in the form set forth
above, in each case with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by the Indenture and this
Supplemental Indenture, and with such letters, numbers, or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
(b) The Notes shall be issued in the aggregate principal amount of
$435,000,000 (or $500,000,000 if the over-allotment option set forth in Section
3 of the Underwriting Agreement dated June 19, 1997 (as amended from time to
time by the parties thereto) by and between the Company and the Underwriters is
exercised in full) and shall mature on July 1, 2004.
Section 102 Interest on the Notes; Payment of Interest.
(a) The Notes shall bear interest at the rate of 7% per annum from June 24,
1997.
(b) The interest so payable, and punctually paid or duty provided for, on
any Interest Payment Date shall, as provided in such Indenture, be paid to the
Person in whose name a Note is registered at the close of business on the
Regular Record Date for such interest, which shall be the December 15 or June 15
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date, subject to the right of the Company to defer interest
during an Extension Period pursuant to 102(c). Any such interest not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name the Note is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Notes of this series not less than 10
calendar days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any Notes exchange
on which the Notes of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.
(c) So long as no Event of Default under the Indenture has occurred and is
continuing, the Company shall have the right at any time during the term of the
Notes to defer interest payments from time to time by extending the interest
payment period for successive periods (each, an "Extension Period") not
exceeding 4 consecutive semi-annual interest payment periods for each such
period; provided, that no Extension Period may extend beyond the Stated Maturity
--------
of the Notes. At the end of each Extension Period, the Company shall be
responsible for the payment of, and the Company shall pay to the Person in whose
name this Security is registered at the close of business
12
<PAGE>
on the Regular Record Date next preceding such payment date all interest then
accrued and unpaid together with interest thereon compounded semi-annually at
the rate specified for the Notes to the extent permitted by applicable law;
provided, that during any Extension Period, the Company shall not, and shall not
--------
allow any of its Subsidiaries to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees of indebtedness for money borrowed) of the
Company that rank pari passu with or junior to the Notes (other than (a) any
dividend, redemption, liquidation, interest, principal or guarantee payment by
the Company where the payment is made by way of securities (including capital
stock) that rank pari passu with or junior to the securities on which such
dividend, redemption, interest, principal or guarantee payment is being made,
(b) purchases of the Company's Common Stock related to the issuance of the
Company's Common Stock under any of the Company's benefit plans for its
directors, officers or employees, (c) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one series or class of
the Company's capital stock for another series or class of the Company's capital
stock, and (d) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged). Prior to the termination of
any such Extension Period, the Company may further extend such Extension Period;
provided, that such Extension Period together with all previous and
--------
further extensions thereof may not exceed 4 consecutive semi-annual interest
payment periods and may not extend beyond the Stated Maturity of the Notes. Upon
the termination of any Extension Period and the payment of all amounts then due,
the Company may commence a new Extension Period, subject to the above
requirements. No interest during an Extension Period shall be due and payable
except at the end thereof.
The Company shall give written notice to the Trustee of its election to
begin such Extension Period at least one Business Day prior to the earlier of
(i) the Regular Record Date for the Interest Payment Date on the Notes that
would have been payable but for the election to begin such Extension Period or
(ii) if the Notes are listed on the New York Stock Exchange, Inc. ("NYSE") or
other stock exchange or quotation system, the date the Company is required to
give notice to the NYSE or other applicable self-regulatory organization or to
Holders of the Notes of the Regular Record Date or the date such interest is
payable.
(d) Payment of the principal of (and premium, if any) and any interest on
the Notes shall be made at the Corporate Trust Office of the Trustee in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that at
the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address appears in the Security
Register.
ARTICLE TWO CERTAIN DEFINITIONS.
Section 201 Certain Definitions.
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<PAGE>
The terms defined in this Section 201 (except as herein otherwise expressly
provided or unless the context of this Supplemental Indenture otherwise
requires) for all purposes of this Supplemental Indenture and of any indenture
supplemental hereto have the respective meanings specified in this Section 201.
All other terms used in this Supplemental Indenture that are defined in the
Indenture or the Trust Indenture Act, either directly or by reference therein
(except as herein otherwise expressly provided or unless the context of this
Supplemental Indenture otherwise requires), have the respective meanings
assigned to such terms in the Indenture or the Trust Indenture Act, as the case
may be, as in force at the date of this Supplemental Indenture as originally
executed.
"Change of Control" has the meaning specified in Section 604 of this
Supplemental Indenture.
"Closing Price Per Share" means, with respect to the Common Stock of the
Company, for any day, the reported last sales price regular way per share or, in
case no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case (i) on the New York
Stock Exchange as reported in The Wall Street Journal (or other similar
newspaper) for New York Stock Exchange Composite Transactions or, if the Common
Stock is not listed or admitted to trading on such Exchange, on the principal
(as determined by the Company's Board of Directors) national securities exchange
on which the Common Stock is listed or admitted to trading or (ii) if not listed
or admitted to trading on any national securities exchange, on the Nasdaq
National Market, or, if the Common Stock is not listed or admitted to trading on
any national securities exchange or quoted on the Nasdaq National Market, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected from time to time
by the Company for that purpose. If no such prices are available, the Closing
Price Per Share shall be the fair value of a share as determined by the Board of
Directors of the Company.
"Conversion Price" shall equal $1,000 divided by the Conversion Rate.
"Conversion Rate" has the meaning specified in Section 501 of this
Supplemental Indenture.
"Extension Period" has the meaning specified in Section 102(c) of this
Supplemental Indenture.
"Purchased Shares" has the meaning specified in Section 502(6) of this
Supplemental Indenture.
"Record Date" shall mean any Regular Record Date or any Special Record
Date.
"Redemption Date", when used with respect to any Note to be redeemed, means
the date fixed for such redemption by or pursuant to this Supplemental
Indenture.
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<PAGE>
"Redemption Price", when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Supplemental
Indenture.
"Repurchase Date" has the meaning specified in Section 601 of this
Supplemental Indenture.
"Repurchase Price" has the meaning specified in Section 601 of this
Supplemental Indenture.
"Trading Days" means (i) if the Common Stock is listed or admitted for
trading on any national securities exchange, days on which such national
securities exchange is open for business or (ii) if the Common Stock is quoted
on the Nasdaq National Market or any similar system of automated dissemination
of quotations of securities prices, days on which trades may be made on such
system or (iii) if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on the Nasdaq National Market or similar
system, days on which the Common Stock is traded regular way in the over-the-
counter market and for which a closing bid and a closing asked price for the
Common Stock are available.
ARTICLE THREE
CERTAIN COVENANTS.
The following covenant shall be applicable to the Company for so long as
any of the Notes are outstanding. Nothing in this paragraph will, however,
affect the Company's obligations under any provision of the Indenture or, except
for Article Three hereof, this Supplemental Indenture.
Section 301 Registration and Listing.
The Company (i) will effect all registrations with, and obtain all
approvals by, all governmental authorities that may be necessary under any
United States Federal or state law (including the Securities Act, the Exchange
Act and state securities and Blue Sky laws) before the shares of Common Stock
issuable upon conversion of Notes may be lawfully issued and delivered, and
thereafter publicly traded, and qualified or listed as contemplated by clause
(ii); and (ii) will list the shares of Common Stock required to be issued and
delivered upon conversion of the Notes prior to such issuance or delivery on The
New York Stock Exchange or such other exchange or automated quotation as the
Common Stock is then listed at such date of conversion.
ARTICLE FOUR
REDEMPTION OF NOTES
Section 401 Right of Redemption.
15
<PAGE>
The Notes may be redeemed in accordance with the provisions of the form of
Security set forth herein.
ARTICLE FIVE
CONVERSION OF NOTES
Section 501 Conversion Privilege and Conversion Rate.
Subject to and upon compliance with the provisions of this Article, at the
option of the Holder thereof, any Note may be converted into fully paid and
nonassessable shares (calculated as to each conversion to the nearest 1/100 of a
share) of Common Stock of the Company at the Conversion Rate, determined as
hereinafter provided, in effect at the time of conversion. Such conversion
right shall commence immediately and expire at the close of business on July 1,
2004, subject, in the case of the conversion of any Global Security, to any
applicable book-entry procedures of the Depositary therefor. In case a Note is
called for redemption at the election of the Company or the Holder thereof
exercises his right to require the Company to repurchase the Note, such
conversion right in respect of the Note shall expire at the close of business on
the Business Day next preceding the Redemption Date or the Repurchase Date (as
defined in Article Six), as the case may be, unless the Company defaults in
making the payment due upon redemption or repurchase, as the case may be (in
each case subject as aforesaid to any applicable book entry procedures).
If, during any Extension Period, a Note (or portion thereof) called for
redemption is surrendered for conversion, any accrued and unpaid interest on
such Note (or portion thereof) as of the Interest Payment Date occurring on or
immediately preceding the conversion date for such Note (or portion thereof)
shall be paid in cash to the Holder surrendering such Note for conversion.
The rate at which shares of Common Stock shall be delivered upon conversion
(herein called the "Conversion Rate") shall be initially 14.8272 shares of
Common Stock for each $1,000 principal amount of Notes. The Conversion Rate
shall be adjusted in certain instances as provided in this Article Five.
Section 502 Adjustment of Conversion Rate.
The Conversion Rate shall be subject to adjustment from time to time as
follows:
(1) In case the Company shall pay or make a dividend or other distribution
on Common Stock payable in shares of Common Stock, the Conversion Rate in effect
at the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be increased by dividing such Conversion Rate by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such increase to become
effective immediately after the opening of business on the day following the
16
<PAGE>
date fixed for such determination. If, after any such date fixed for
determination, any dividend or distribution is not in fact paid, the Conversion
Rate shall be immediately readjusted, effective as of the date the Board of
Directors determines not to pay such dividend or distribution, to the Conversion
Rate that would have been in effect if such determination date had not been
fixed. For the purposes of this paragraph (1), the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
(2) In case the Company shall issue rights, options or warrants to all
holders of its Common Stock entitling them to subscribe for or purchase shares
of Common Stock at a price per share less than the current market price per
share (determined as provided in paragraph (8) of this Section 502) of the
Common Stock on the date fixed for the determination of stockholders entitled to
receive such rights, options or warrants (other than any rights, options or
warrants that by their terms will also be issued to any Holder upon conversion
of a Note into shares of Common Stock without any action required by the Company
or any other Person), the Conversion Rate in effect at the opening of business
on the day following the date fixed for such determination shall be increased by
dividing such Conversion Rate by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such increase to become effective immediately after
the opening of business on the day following the date fixed for such
determination. If, after any such date fixed for determination, any such
rights, options or warrants are not in fact issued, or are not exercised prior
to the expiration thereof, the Conversion Rate shall be immediately readjusted,
effective as of the date such rights, options or warrants expire, or the date
the Board of Directors determines not to issue such rights, options or warrants,
to the Conversion Rate that would have been in effect if the unexercised rights,
options or warrants had never been granted or such determination date had not
been fixed, as the case may be. For the purposes of this paragraph (2), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company will not issue any rights, options or warrants in respect of
shares of Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Conversion Rate in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion Rate in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be
17
<PAGE>
proportionately reduced, such increase or reduction, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
(4) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness, shares of any class
of capital stock, or other property (including securities, but excluding (i) any
rights, options or warrants referred to in paragraph (2) of this Section, (ii)
any dividend or distribution paid exclusively in cash, (iii) any dividend or
distribution referred to in paragraph (1) of this Section) the Conversion Rate
shall be adjusted so that the same shall equal the rate determined by dividing
the Conversion Rate in effect immediately prior to the close of business on the
date fixed for the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the current market
price per share (determined as provided in paragraph (8) of this Section 502) of
the Common Stock on the date fixed for such determination less the then fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution filed with the Trustee) of the
portion of the assets, shares or evidences of indebtedness so distributed
applicable to one share of Common Stock and the denominator shall be such
current market price per share of the Common Stock, such adjustment to become
effective immediately prior to the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
distribution. If, after any such date fixed for determination, any such
distribution is not in fact made, the Conversion Rate shall be immediately
readjusted, effective as of the date the Board of Directors determines not to
make such distribution, to the Conversion Rate that would have been in effect if
such determination date had not been fixed.
(5) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding any cash that is distributed as part
of a distribution referred to in paragraph (4) of this Section) in an aggregate
amount that, combined together with (I) the aggregate amount of any other cash
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution and in respect
of which no adjustment pursuant to this paragraph (5) has been made and (II) the
aggregate of any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) of consideration payable in respect of any tender offer by the
Company or any of its subsidiaries for all or any portion of the Common Stock
concluded within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to paragraph (6) of
this Section 502 has been made (the "combined cash and tender amount") exceeds
12.5% of the product of the current market price per share (determined as
provided in paragraph (8) of this Section 502) of the Common Stock on the date
for the determination of holders of shares of Common Stock entitled to receive
such distribution times the number of shares of Common Stock outstanding on such
date (the "aggregate current market price"), then, and in each such case,
immediately after the close of business on such date for determination, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate in effect immediately prior to the
close of business on the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (i) the numerator
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of which shall be equal to the current market price per share (determined as
provided in paragraph (8) of this Section 502) of the Common Stock on the date
fixed for such determination less an amount equal to the quotient of (x) the
excess of such combined cash and tender amount over such aggregate current
market price divided by (y) the number of shares of Common Stock outstanding on
such date for determination and (ii) the denominator of which shall be equal to
the current market price per share (determined as provided in paragraph (8) of
this Section 502) of the Common Stock on such date for determination.
(6) In case a tender offer made by the Company or any Subsidiary for all or
any portion of the Common Stock shall expire and such tender offer (as amended
upon the expiration thereof) shall require the payment to stockholders (based on
the acceptance (up to any maximum specified in the terms of the tender offer) of
Purchased Shares (as defined below)) of an aggregate consideration having a fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution) that combined together with
(I) the aggregate of the cash plus the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive and described in a
Board Resolution), as of the expiration of such tender offer, of consideration
payable in respect of any other tender offer by the Company or any Subsidiary
for all or any portion of the Common Stock expiring within the 12 months
preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to this paragraph (6) has been made and (II) the aggregate
amount of any cash distributions to all holders of the Company's Common Stock
within 12 months preceding the expiration of such tender offer and in respect of
which no adjustment pursuant to paragraph (5) of this Section has been made (the
"combined tender and cash amount") exceeds 12.5% of the product of the current
market price per share of the Common Stock (determined as provided in paragraph
(8) of this Section 502) as of the last time (the "Expiration Time") tenders
could have been made pursuant to such tender offer (as it may be amended) times
the number of shares of Common Stock outstanding (including any tendered shares)
as of the Expiration Time, then, and in each such case, immediately prior to the
opening of business on the day after the date of the Expiration Time, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate immediately prior to close of
business on the date of the Expiration Time by a fraction (i) the numerator of
which shall be equal to (A) the product of (I) the current market price per
share of the Common Stock (determined as provided in paragraph (8) of this
Section 502) on the date of the Expiration Time multiplied by (II) the number of
shares of Common Stock outstanding (including any tendered shares) on the
Expiration Time less (B) the combined tender and cash amount, and (ii) the
denominator of which shall be equal to the product of (A) the current market
price per share of the Common Stock (determined as provided in paragraph (8) of
this Section 502) as of the Expiration Time multiplied by (B) the number of
shares of Common Stock outstanding (including any tendered shares) as of the
Expiration Time less the number of all shares validly tendered and not withdrawn
as of the Expiration Time (the shares deemed so accepted up to any such maximum,
being referred to as the "Purchased Shares").
(7) The reclassification of Common Stock into securities including other
than Common Stock (other than any reclassification upon a consolidation or
merger to which Section 1409 of the Indenture applies) shall be deemed to
involve (a) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
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<PAGE>
be deemed to be "the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such determination" within
the meaning of paragraph (4) of this Section), and (b) a subdivision or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of shares
of Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective",
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (3) of this Section 502).
(8) For the purpose of any computation under paragraphs (2), (4), (5) or
(6) of this Section 502, the current market price per share of Common Stock on
any date shall be calculated by the Company and be deemed to be the average of
the daily Closing Prices Per Share for the five consecutive Trading Days
selected by the Company commencing not more than 10 Trading Days before, and
ending not later than, the earlier of the day in question and the day before the
"ex" date with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "'ex' date", when used
with respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way in the applicable securities market or on the
applicable securities exchange without the right to receive such issuance or
distribution.
(9) No adjustment in the Conversion Rate shall be required unless such
adjustment (plus any adjustments not previously made by reason of this paragraph
(9)) would require an increase or decrease of at least one percent in such rate;
provided, however, that any adjustments which by reason of this paragraph (9)
-------- -------
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may be.
(10) The Company may make such increases in the Conversion Rate, for the
remaining term of the Notes or any shorter term, in addition to those required
by paragraphs (1), (2), (3), (4), (5) and (6) of this Section 502, as it
considers to be advisable in order to avoid or diminish any income tax to any
holders of shares of Common Stock resulting from any dividend or distribution of
stock or issuance of rights or warrants to purchase or subscribe for stock or
from any event treated as such for income tax purposes. The Company shall have
the power to resolve any ambiguity or correct any error in this paragraph (10)
and its actions in so doing shall, absent manifest error, be final and
conclusive.
(11) Notwithstanding the foregoing provisions of this Section, no adjustment
of the Conversion Rate shall be required to be made (a) upon the issuance of
shares of Common Stock pursuant to any present or future plan for the
reinvestment of dividends or (b) because of a tender or exchange offer of the
character described in Rule 13e-4(h)(5) under the Exchange Act or any successor
rule thereto.
(12) To the extent permitted by applicable law, the Company from time to
time may increase the Conversion Rate by any amount for any period of time if
the period is at least twenty
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(20) days, the increase is irrevocable during such period, and the Board of
Directors shall have made a determination that such increase would be in the
best interests of the Company, which determination shall be conclusive;
provided, however, that no such increase shall be taken into account for
-------- -------
purposes of determining whether the Closing Price Per Share of the
Common Stock exceeds the Conversion Price by 105% in connection with an event
which would otherwise be a Change of Control pursuant to Section 604(4).
Whenever the Conversion Rate is increased pursuant to the preceding sentence,
the Company shall give notice of the increase to the Holders in the manner
provided in Section 106 of the Indenture at least fifteen (15) days prior to the
date the increased Conversion Rate takes effect, and such notice shall state the
increased Conversion Rate and the period during which it will be in effect.
ARTICLE SIX REPURCHASE OF NOTES AT THE OPTION OF THE
HOLDER UPON A CHANGE OF CONTROL.
Section 601 Right to Require Repurchase.
In the event that a Change in Control (as hereinafter defined) shall occur,
then each Holder shall have the right, at the Holder's option, but subject to
the provisions of Section 602, to require the Company to repurchase, and upon
the exercise of such right the Company shall repurchase, all of such Holder's
Notes not theretofore called for redemption, or any portion of the principal
amount thereof that is equal to $1,000 or any integral multiple of $1,000 in
excess thereof (provided that no single Note may be repurchased in part unless
--------
the portion of the principal amount of such Note to be Outstanding after such
repurchase is equal to $1,000 or integral multiples of $1,000 in excess
thereof), on the date (the "Repurchase Date") that is 45 days after the date of
the Company Notice (as defined in Section 603) at a purchase price equal to 100%
of the principal amount of the Notes to be repurchased plus interest accrued to,
but excluding, the Repurchase Date (including any unpaid interest that has
accrued during the Extension Period) (the "Repurchase Price"); provided,
--------
however, that installments of interest on Notes whose Stated Maturity is on or
-------
prior to the Repurchase Date shall be payable to the Holders of such Notes, or
one or more Predecessor Notes, registered as such on the relevant Record Date
according to their terms and the provisions of Section 307 of the Indenture.
Such right to require the repurchase of the Notes shall not continue after a
discharge of the Company from its obligations with respect to the Notes in
accordance with Article Four of the Indenture, unless a Change in Control shall
have occurred prior to such discharge. At the option of the Company, the
Repurchase Price may be paid in cash or, subject to the fulfillment by the
Company of the conditions set forth Section 602, by delivery of shares of Common
Stock having a fair market value equal to the Repurchase Price. Whenever in
this Supplemental Indenture or the Indenture (including in the Form of Note,
Section 101 of this Supplemental Indenture, and Sections 501(1) and 508 of the
Indenture) there is a reference, in any context, to the principal of any Note as
of any time, such reference shall be deemed to include reference to the
Repurchase Price payable in respect of such Note to the extent that such
Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Supplemental Indenture
shall not be construed as excluding the Repurchase Price in those provisions of
this Supplemental Indenture or Indenture when such express mention is not made;
provided,
--------
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however, that for the purposes of Article Fifteen of the Indenture such
-------
reference shall be deemed to include reference to the Repurchase Price only to
the extent the Repurchase Price is payable in cash.
Section 602 Conditions to the Company's Election to Pay the Repurchase Price in
Common Stock.
The Company may elect to pay the Repurchase Price by delivery of shares of
Common Stock pursuant to Section 601 if and only if the following conditions
shall have been satisfied:
(1) The shares of Common Stock deliverable in payment of the Repurchase
Price shall have a fair market value as of the Repurchase Date of not less than
the Repurchase Price. For purposes of Section 601 and this Section 602, the
fair market value of shares of Common Stock shall be determined by the Company
and shall be equal to 95% of the average of the Closing Prices Per Share for the
five consecutive Trading Days immediately preceding the second Trading Day prior
to the Repurchase Date;
(2) The Repurchase Price shall be paid only in cash in the event any shares
of Common Stock to be issued upon repurchase of Notes hereunder (i) require
registration under any federal securities law before such shares may be freely
transferrable without being subject to any transfer restrictions under the
Securities Act upon repurchase and if such registration is not completed or does
not become effective prior to the Repurchase Date, and/or (ii) require
registration with or approval of any governmental authority under any state law
or any other federal law before such shares may be validly issued or delivered
upon repurchase and if such registration is not completed or does not become
effective or such approval is not obtained prior to the Repurchase Date;
(3) Payment of the Repurchase Price may not be made in Common Stock unless
such stock is, or shall have been, approved for listing on the New York Stock
Exchange or quotation on the Nasdaq National Market, in either case, prior to
the Repurchase Date; and
(4) All shares of Common Stock which may be issued upon repurchase of Notes
will be issued out of the Company's authorized but unissued Common Stock and,
will upon issue, be duly and validly issued and fully paid and non-assessable
and free of any preemptive rights.
If all of the conditions set forth in this Section 602 are not satisfied in
accordance with the terms thereof, the Repurchase Price shall be paid by the
Company only in cash.
Section 603 Notices; Method of Exercising Repurchase Right, Etc.
(1) Unless the Company shall have theretofore called for redemption all of
the Outstanding Notes, on or before the 30th day after the occurrence of a
Change in Control, the Company or, at the request and expense of the Company on
or before the 15th day after such occurrence, the Trustee, shall give to all
Holders of Notes, in the manner provided in Section 106 of the Indenture, notice
(the "Company Notice") of the occurrence of the Change in Control and of the
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repurchase right set forth herein arising as a result thereof. The Company
shall also deliver a copy of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(i) the Repurchase Date,
(ii) the date by which the repurchase right must be exercised,
(iii) the Repurchase Price, and whether the Repurchase Price shall be
paid by the Company in cash or by delivery of shares of Common Stock,
(iv) a description of the procedure which a Holder must follow to
exercise a repurchase right, and the place or places where such Notes, are
to be surrendered for payment of the Repurchase Price and accrued interest,
if any,
(v) that on the Repurchase Date the Repurchase Price, and accrued
interest, if any, will become due and payable upon each such Note
designated by the Holder to be repurchased, and that interest thereon shall
cease to accrue on and after said date,
(vi) the Conversion Rate then in effect, the date on which the right
to convert the principal amount of the Notes to be repurchased will
terminate and the place or places where such Notes may be surrendered for
conversion, and
(vii) the place or places that the Note certificate with the Election
of Holder to Require Repurchase as specified in the form of Note shall be
delivered.
No failure of the Company to give the foregoing notices or defect therein
shall limit any Holder's right to exercise a repurchase right or affect the
validity of the proceedings for the repurchase of Notes.
If any of the foregoing provisions or other provisions of this Article Six
are inconsistent with applicable law, such law shall govern.
(2) To exercise a repurchase right, a Holder shall deliver to the Trustee
on or before the 30th day after the date of the Company Notice (i) written
notice of the Holder's exercise of such right, which notice shall set forth the
name of the Holder, the principal amount of the Notes to be repurchased (and, if
any Note is to repurchased in part, the serial number thereof, the portion of
the principal amount thereof to be repurchased and the name of the Person in
which the portion thereof to remain Outstanding after such repurchase is to be
registered) and a statement that an election to exercise the repurchase right is
being made thereby, and, in the event that the Repurchase Price shall be paid in
shares of Common Stock, the name or names (with addresses) in which the
certificate or
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certificates for shares of Common Stock shall be issued, and (ii) the Notes with
respect to which the repurchase right is being exercised. Such written notice
shall be irrevocable, except that the right of the Holder to convert the Notes
with respect to which the repurchase right is being exercised shall continue
until the close of business on the Business Day prior to the Repurchase Date.
(3) In the event a repurchase right shall be exercised in accordance with
the terms hereof, the Company shall pay or cause to be paid to the Trustee the
Repurchase Price in cash or shares of Common Stock, as provided above, for
payment to the Holder on the Repurchase Date or, if shares of Common Stock are
to be paid, as promptly after the Repurchase Date as practicable, together with
accrued and unpaid interest to the Repurchase Date payable with respect to the
Notes as to which the repurchase right has been exercised; provided, however,
-------- -------
that installments of interest that mature on or prior to the Repurchase Date
shall be payable in cash to the Holders of such Notes, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Regular Record Date.
(4) If any Note (or portion thereof) surrendered for repurchase shall not
be so paid on the Repurchase Date, the principal amount of such Note (or portion
thereof, as the case may be) shall, until paid, bear interest to the extent
permitted by applicable law from the Repurchase Date at the rate of 7% per
annum, and each Note shall remain convertible into Common Stock until the
principal of such Note (or portion thereof, as the case may be) shall have been
paid or duly provided for.
(5) Any Note which is to be repurchased only in part shall be surrendered
to the Trustee (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and make available for delivery to the Holder of such Note without service
charge, a new Note or Notes, containing identical terms and conditions, each in
an authorized denomination in aggregate principal amount equal to and in
exchange for the unrepurchased portion of the principal of the Note so
surrendered.
(6) Any issuance of shares of Common Stock in respect of the Repurchase
Price shall be deemed to have been effected immediately prior to the close of
business on the Repurchase Date and the Person or Persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such repurchase shall be deemed to have become on the Repurchase Date the
holder or holders of record of the shares represented thereby; provided,
--------
however, that any surrender for repurchase on a date when the stock transfer
-------
books of the Company shall be closed shall constitute the Person or Persons in
whose name or names the certificate or certificates for such shares are to be
issued as the record holder or holders thereof for all purposes at the opening
of business on the next succeeding day on which such stock transfer books are
open. No payment or adjustment shall be made for dividends or distributions on
any Common Stock issued upon repurchase of any Note declared prior to the
Repurchase Date.
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(7) No fractions of shares shall be issued upon repurchase of Notes. If
more than one Note shall be repurchased from the same Holder and the Repurchase
Price shall be payable in shares of Common Stock, the number of full shares
which shall be issuable upon such repurchase shall be computed on the basis of
the aggregate principal amount of the Notes so repurchased. Instead of any
fractional share of Common Stock which would otherwise be issuable on the
repurchase of any Note or Notes, the Company will deliver to the applicable
Holder a check for the current market value of such fractional share. The
current market value of a fraction of a share is determined by multiplying the
current market price of a full share by the fraction, and rounding the result to
the nearest cent. For purposes of this Section, the current market price of a
share of Common Stock is the Closing Price Per Share of the Common Stock on the
Trading Day immediately preceding the Repurchase Date.
(8) Any issuance and delivery of certificates for shares of Common Stock on
repurchase of Notes shall be made without charge to the Holder of Notes being
repurchased for such certificates or for any tax or duty in respect of the
issuance or delivery of such certificates or the Notes represented thereby;
provided, however, that the Company shall not be required to pay any tax or duty
-------- -------
which may be payable in respect of (i) income of the Holder or (ii) any transfer
involved in the issuance or delivery of certificates for shares of Common Stock
in a name other than that of the Holder of the Notes being repurchased, and no
such issuance or delivery shall be made unless and until the Person requesting
such issuance or delivery has paid to the Company the amount of any such tax or
duty or has established, to the satisfaction of the Company, that such tax or
duty has been paid.
(9) All Notes delivered for repurchase shall be delivered to the Trustee to
be canceled at the direction of the Trustee, which shall dispose of the same as
provided in Section 309 of the Indenture.
Section 604 Certain Definitions.
For purposes of this Article Six,
(1) the term "beneficial owner" shall be determined in accordance with Rule
13d-3, as in effect on the date of the original execution of this Supplemental
Indenture, promulgated by the Commission pursuant to the Exchange Act;
(2) a "Change in Control" shall be deemed to have occurred at the time,
after the original issuance of the Notes, of:
(i) the acquisition by any Person (including any syndicate or group
deemed to be a "person" under Section 13(d)(3) of the Exchange Act) of
beneficial ownership, directly or indirectly, through a purchase, merger or
other acquisition transaction or series of transactions, of shares of capital
stock of the Company entitling such person to exercise 50% or more of the total
voting power of all shares of capital stock of the Company entitled to vote
generally in the elections
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of directors (any shares of voting stock of which such person or group is the
beneficial owner that are not then outstanding being deemed outstanding for
purposes of calculating such percentage), other than any such acquisition by the
Company, any Subsidiary of the Company or any employee benefit plan of the
Company existing on the date of this Supplemental Indenture; or
(ii) any consolidation of the Company with, or merger of the Company
into, any other Person, any merger of another Person into the Company, or any
sale or transfer of all or substantially all of the assets (other than to a
wholly-owned subsidiary of the Company) of the Company to any other Person
(other than (a) any such transaction pursuant to which the holders of 50% or
more of the total voting power of all shares of capital stock of the Company
entitled to vote generally in elections of directors immediately prior to such
transaction have, directly or indirectly, at least 50% or more of the total
voting power of all shares of capital stock of the continuing or surviving
corporation entitled to vote generally in elections of directors of the
continuing or surviving corporation immediately after such transaction and (b) a
merger (x) which does not result in any reclassification, conversion, exchange
or cancellation of outstanding shares of capital stock of the Company or (y)
which is effected solely to change the jurisdiction of incorporation of the
Company and results in a reclassification, conversion or exchange of outstanding
shares of Common Stock into solely shares of common stock);
provided, however, that a Change in Control shall not be deemed to have occurred
-------- -------
if either (a) the Closing Price Per Share of the Common Stock for any five
Trading Days within the period of 10 consecutive Trading Days ending immediately
after the later of the Change in Control or the public announcement of the
Change in Control (in the case of a Change in Control under clause 604(2)(i)
above) or the period of 10 consecutive Trading Days ending immediately before
the Change in Control (in the case of a Change in Control under clause
604(2)(ii) above) shall equal or exceed 105% of the Conversion Price of the
Notes in effect on each such Trading Day, or (b) all of the consideration
(excluding cash payments for fractional shares and cash payments made pursuant
to dissenters' appraisal rights) in a merger or consolidation constituting the
Change in Control described in clause 604(2)(i) and/or clause 604(2)(ii) above
consists of shares of common stock traded on a national securities exchange or
quoted on the Nasdaq National Market (or will be so traded or quoted immediately
following the Change in Control) and as a result of such transaction or
transactions the Notes become convertible solely into such common stock.
(3) for purposes of Section 604(2)(i), the term "person" shall include any
syndicate or group which would be deemed to be a "person" under Section 13(d)(3)
of the Exchange Act, as in effect on the date of the original execution of this
Supplemental Indenture.
Section 605 Consolidation, Merger, etc.
In the case of any consolidation, conveyance, sale, transfer or lease of
all or substantially all of the assets of the Company to which Section 1409
applies, in which the Common Stock of the Company is changed or exchanged as a
result into the right to receive shares of stock and other securities or
property or assets (including cash) which includes shares of Common Stock of the
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Company or common stock of another Person that are, or upon issuance will be,
traded on a United States national securities exchange or approved for trading
on an established automated over-the-counter trading market in the United States
and such shares constitute at the time such change or exchange becomes effective
in excess of 50% of the aggregate fair market value of such shares of stock and
other securities, property and assets (including cash) (as determined by the
Company, which determination shall be conclusive and binding), then the Person
formed by such consolidation or resulting from such merger or combination or
which acquires the properties or assets (including cash) of the Company, as the
case may be, shall execute and deliver to the Trustee a supplemental indenture
(which shall comply with the Trust Indenture Act as in force at the date of
execution of such supplemental indenture) modifying the provisions of this
Supplemental Indenture relating to the right of Holders to cause the Company to
repurchase the Notes following a Change in Control, including without limitation
the applicable provisions of this Article Six and the definitions of the Common
Stock and Change in Control, as appropriate, and such other related definitions
set forth herein as determined in good faith by the Company (which determination
shall be conclusive and binding), to make such provisions apply in the event of
a subsequent Change of Control to the common stock and the issuer thereof if
different from the Company and Common Stock of the Company (in lieu of the
Company and the Common Stock of the Company).
ARTICLE SEVEN
EVENT OF DEFAULT
Section 701 Event of Default.
In addition to the Events of Default set forth in Section 501 of the
Indenture, the following will be an Event of Default under the Supplemental
Indenture: any indebtedness under any bond, debenture, note or other evidence
of indebtedness for money borrowed by the Company in a principal amount then
outstanding in excess of $50,000,000 is not paid at final maturity thereof
(either at its stated maturity or upon acceleration thereof), and such
indebtedness is not discharged, or such acceleration is not rescinded or
annulled, within a period of 30 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the Outstanding
Notes a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder.
ARTICLE EIGHT
MISCELLANEOUS
Section 801 Applicability of Certain Indenture Provisions.
Each of the defeasance and covenant defeasance provisions of Article
Thirteen of the Indenture shall apply to the Notes.
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Section 802 Reference to and Effect on the Indenture.
This Supplemental Indenture shall be construed as supplemental to the
Indenture and all the terms and conditions of this Supplemental Indenture shall
be deemed to be part of the terms and conditions of the Indenture. Except as
set forth herein, the Indenture heretofore executed and delivered is hereby (i)
incorporated by reference in this Supplemental Indenture and (ii) ratified,
approved and confirmed.
Section 803 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision, or condition set forth in Article Three hereof if the Holders of a
majority in principal amount of the outstanding Notes shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision, or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such term,
provision, or condition shall remain in full force and effect.
Section 804 Supplemental Indenture May be Executed In Counterparts.
This instrument may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute but
one and the same instrument.
Section 805 Effect of Headings.
The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed all as of the day and year first above written.
Micron Technology, Inc.
By:
------------------------------
Name:
Title:
Norwest Bank of Minnesota, National
Association, as Trustee
By:
------------------------------
Name:
Title:
29
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EXHIBIT H
PRICE ALLOCATION/TAX PARAMETERS:
-------------------------------
1. The value of the Buyer Common Stock shall equal the average trading price
on the Closing Date.
2. The Subordinated Notes and the Convertible Notes are indebtedness for Tax
purposes. The Cash Payment is being made in the exchange described in
Section 3.4 with Seller Note Purchasing Subsidiary.
3. The allocation can include an allocation among the assets acquired by
Singapore Newco and Italian Newco pursuant to the Reorganization.
4. The transactions described in this Agreement shall be treated as taxable
transactions. The contribution of assets to Singapore Newco and Italian
Newco pursuant to the Reorganization will be, for U.S. federal and state
Tax purposes, taxable transactions that do not qualify under Section 351 of
the Code (or comparable provisions of state law).
5. No portion of the transaction represents consideration being paid to the
Buyer, Italian Newco, or Singapore Newco (including in the form of a
purchase price reduction) for the purpose of assuming liabilities or
undertaking certain activities or obligations. There is no deemed
consideration that is being paid to the Seller Group and repaid to the
Buyer, Italian Newco, or Singapore Newco.
H-1
<PAGE>
EXHIBIT I
---------
TRANSITION SERVICES AGREEMENT
By and Between
PERRY
and
DIXIE
THIS TRANSITION SERVICES AGREEMENT (this "Agreement") is made effective as
of the Closing Date by and between Perry, a Delaware corporation ("Seller" or
"Perry") and Dixie, a Delaware corporation ("Buyer").
WITNESSETH
WHEREAS, Seller and Dixie have entered into that certain Acquisition
Agreement dated as of June __, 1998 (the "Acquisition Agreement"), pursuant to
which Seller agreed to sell to Dixie the "Acquired Assets" and Dixie has agreed
to assume from Seller the "Assumed Liabilities" ( all defined terms not defined
herein shall have the meaning set forth in the Acquisition Agreement).
WHEREAS, in consideration of the historical interconnections between the
Acquired Assets and Perry, the parties desire to provide certain support,
services, goods, and facilities to each other in order to promote the efficient
operation of their respective businesses, during the period in which the
functional separation contemplated by the Acquisition Agreement will occur (the
"Transition Services").
WHEREAS, such Transition Services shall be provided for the period
specified in any applicable Supplemental Agreement, as defined below, or, if no
such Supplemental Agreement, then for a period of twelve (12) months (the
"Transition Period");
WHEREAS, Seller has agreed to provide to Buyer, and Buyer desires the right
to purchase from Seller certain Transition Services on the terms and conditions
more particularly set forth herein or as the parties may otherwise agree in
writing;
WHEREAS, Seller desires Buyer to continue to provide, and the Buyer has
agreed to continue to provide to Seller, certain Transition Services currently
provided by the Business to Seller on the terms and conditions more particularly
set forth herein or as the parties may otherwise agree in writing;
NOW, THEREFORE, in consideration of the mutual promises and agreement
herein set forth, Seller and Buyer, intending to be legally bound, hereby agree
as follows:
ARTICLE 1
<PAGE>
NATURE OF THE AGREEMENT
1.1 The following are general terms and conditions under which Seller will
provide to Buyer, and Buyer shall provided to Seller, the Transition Services.
The Transition Services will be provided in accordance with these general terms
and conditions and in accordance with the terms and conditions set forth in the
Supplements attached hereto as Supplements _________ through _______ and made a
part of this Agreement, and any future Supplemental Agreement hereto entered
into between Seller and Buyer, as such agreements may be modified, amended or
extended.
1.2 The terms of this Agreement and the applicable Supplemental Agreement
shall both apply to the Services being performed. To the extent general terms
contained herein are not contradicted by the terms of the Supplemental
Agreement, the general terms in this Agreement shall govern. In any case where
the terms of this Agreement and the terms of a Supplemental Agreement are in
conflict, the terms of the Supplemental Agreement shall take precedence. In
this regard it is agreed by the parties that the Supplemental Agreement may
provide terms and conditions as to the nature, scope, volume and type of the
Transition Services covered thereby, in which case the terms of the Supplemental
Agreement shall prevail as to such matters.
1.3 In the event of any conflict between any preprinted terms on a
purchase order that may be used between Seller and Buyer relating to the
Services and the terms of this Agreement or any applicable Supplemental
Agreement, the terms of this Agreement or the applicable Supplemental Agreement
shall control and such purchase order shall be deemed binding, only if accepted
in writing by the vendee thereof.
ARTICLE 2
SERVICES
2.1 The Transition Services shall include the Transition Services
anticipated by the "Supplemental Agreements" described below. It is the basic
intent of the parties that Transition Services of like kind, quality and amount,
as performed prior to the date hereof by the Seller Group members for the
Business, as customers, or as presently performed by the Business for the Seller
Group members (other than the Buyer Operating Group members), as customers, will
be made available to the party or parties needing such Transition Service as
necessary to promote a smooth and efficient functional separation of the
Business from the operations of Seller. In addition, the parties acknowledge
that they may in good faith agree to include in the Supplemental Agreements
services beyond (in volume, type and nature) those historically provided to the
Business. When mutually agreed upon in a Supplemental Agreement, these
Transition Services may include those reasonably necessary to support continued
operation of the Business as such Business was conducted at the time of Closing
and those reasonably necessary to provide for a smooth and orderly transition by
Buyer into the operation of the Business as soon as reasonably practicable
during the Transition Period. The Supplemental Agreements are:
-2-
<PAGE>
2.1.1 Facilities Agreements. During the Transition Period, Seller
---------------------
will provide certain facilities and shared occupancy-related services to Buyer
and Buyer will provide certain facilities and shared occupancy-related services
to Seller, at the sites described on attached Supplement 1(a) upon the terms and
conditions substantially in the form set forth in attached Supplement 1(b) (the
"Facilities Agreements"). Seller and Buyer acknowledge that certain relocations,
consolidations, and modifications to certain premises covered by the Facilities
Agreements may be necessary in order to accomplish a functional separation of
the respective operations of Seller and Buyer (the "Facilities Transition
Activities"), and that the terms and conditions for such Facility Transition
Activities will be set forth in the Facility Agreement for such premises. During
the Transition Period, Seller and Buyer agree to use commercially reasonable
efforts to facilitate a functional separation of their respective operations and
complete the Transition Activities as soon as reasonably practicable. During the
Transition Period, Seller and Buyer agree to cooperate in good faith to
facilitate a smooth transition with minimal disruption to ongoing operations of
both parties. If appropriate under the circumstances, a summary of any such
anticipated Facilities Transition Activities, and the process and schedule
therefore, shall be attached hereto as Supplement 1(c) (the "Facilities
Transition Summary").
2.1.2 IT Transition Services Agreement. During the Transition
--------------------------------
Period, Seller will provide certain information technology systems and services
support to Buyer, and Buyer will provide certain information technology systems
and services support to Seller upon the terms and conditions set forth in
Supplemental Agreement 2, and "IT Transition Services Agreement."
2.1.3 Finance and Accounting Transition Services Agreement. During
----------------------------------------------------
the Transition Period, Seller will provide certain finance and accounting
services support to Buyer, and Buyer will provide certain finance and accounting
services support to Seller upon the terms and conditions set forth in
Supplemental Agreement 3, the "Finance and Accounting Transition Services
Agreement."
2.1.4 EPROM/FLASH Purchase Agreement. Seller shall provide Buyer
------------------------------
with EPROM/FLASH products and related services upon the terms and conditions set
forth in Supplemental Agreement 4, the "EPROM/FLASH Purchase Agreement."
2.1.5 Design Automation Service Agreement. Seller shall provide
-----------------------------------
Buyer with design automation services upon the terms and conditions set forth in
Supplemental Agreement 5, the "Design Automation Services Agreement."
2.1.6 Research and Development Services Agreement. Seller shall
-------------------------------------------
provide Buyer with SiTD research and development services upon the terms and
conditions set forth in Supplemental Agreement 6, the "Research and Development
Agreement."
2.1.7 Test Systems Service and Support Agreement. Seller shall
------------------------------------------
provide Buyer with test systems service and support, [including, without
limitation as appropriate, Laser Scriber and Product Redundancy Analyzing System
services and support] upon the terms and conditions set forth in Supplemental
Agreement 7, the "Test Systems Service and Support Agreement."
-3-
<PAGE>
2.1.8 Wire Bonder Equipment Service and Support Agreement. Seller
---------------------------------------------------
shall provide Buyer with wire bonder equipment service and support upon the
terms and conditions set forth in Supplemental Agreement 8, the "Wire Bonder
Equipment Service and Support Agreement."
2.1.9 Military Memory Products Purchase Agreement. Buyer shall
-------------------------------------------
provide Seller military memory product and related services support upon the
terms and conditions set forth in Supplemental Agreement 9, the "Military Memory
Products Purchase Agreement."
2.1.10 Quartz Material Purchase Agreement. Buyer shall provide Seller
----------------------------------
with quartz material and related services from the facility in Avezzano, Italy
(to be conveyed from Seller to Buyer at Closing), upon the terms and conditions
set forth in Supplemental Agreement 10, the "Quartz Material Purchase
Agreement."
2.1.11 Human Resources Administration Transition Services Agreement.
------------------------------------------------------------
Seller shall provide Buyer certain human resources administrative and consulting
services and Buyer shall provide certain human resources administrative and
consulting services to Seller upon the terms and conditions set forth in
Supplemental Agreement 11, the "Human Resources Administration Transition
Services Agreement."
2.1.12 Purchasing and Logistics Transition Services Agreement Seller
------------------------------------------------------
shall provide certain purchasing, inventory management, shipping, receiving and
other logistics services and support to Buyer, and Buyer shall provide certain
purchasing, inventory management, shipping, receiving and other logistics
services and support to Seller, upon the terms and conditions set forth in
Supplemental Agreement 12 the "Purchasing and Logistics and Transition Services
Agreement."
2.1.xx [Insert such other Transition Services as the Buyer and Seller
shall, after good faith discussions, agree upon in writing prior to the Closing
in order to implement the spirit and intent of this Agreement, which Transition
Services may include, as appropriate, administrative or commercial support
commitments, such as (perhaps) manufacturing equipment installation assistance.]
2.2 The parties acknowledge and agree that there may be some services
Seller or another Seller Group member (other than the Buyer Operating Group)
provided to the Business, or the Business provided to Seller, that are not
specifically identified in this Agreement, the Supplemental Agreements or the
other agreements referred to herein, of which Buyer or Seller may not be aware
until the time such service is needed (including during the Transition Period).
Accordingly, in addition to the Transition Services described in Section 2.1,
above, the parties further agree that, if "Additional Transition Services" not
contemplated by this Agreement or the Supplemental Agreements under the
provisions of Section 2.1, above, should be required to implement the spirit and
intent of this Agreement, then, such Additional Transition Services as may be
identified and mutually agreed upon in writing by the parties, shall be provided
to the appropriate Buyer, a Buyer Operating Group member, Seller or a Seller
Group member. Buyer and Seller shall document the inclusion in this Agreement of
such Additional Transition Services hereunder by an amendment, letter agreement,
or memorandum signed by duly authorized
-4-
<PAGE>
representatives of both parties, referencing and incorporating (unless the
parties agree otherwise in such document) this Agreement, as appropriate and
agreed upon by the parties.
2.3 Except where otherwise specified in any Supplemental Agreement, the
party providing the Services shall retain the right, in its reasonable
discretion to select, change or outsource any equipment, materials, procedures,
or personnel (including vendors, suppliers, or contractors) used in performing
the Services so long as such action does not materially and adversely affect the
costs, quality, kind or amount of the Services being provided including any
required specifications in or pursuant to a Supplemental Agreement are
satisfied. At its option, the party providing the services, without the consent
of the other party, may assign or subcontract any or all of its rights and/or
obligations hereunder to any of its subsidiaries or any entity acquiring
substantially all of the assets of the business unit of the party by whom any
particular service is provided under any of the Supplemental Agreements. As
used herein, "subsidiary" has the meaning set forth in the Acquisition
Agreement. If a party intends to assign or subcontract its rights and
obligations hereunder or under any of the Supplemental Agreements as permitted
by this Section 2.2, such party shall notify the other party within thirty (30)
days prior to such assignment or subcontracting. Further, any permitted
assignee or subcontractor shall be bound by the terms of this Agreement and any
applicable Supplemental Agreement.
2.4 Unless otherwise specifically agreed, the party receiving a Service
hereunder may terminate such Service or a portion thereof at any time by giving
written notice to the other party. The parties shall cooperate to provide as
much advance notice of termination as possible, but not fewer than thirty (30)
days, unless mutually agreed.
ARTICLE 3
COMPENSATION
3.1 Unless otherwise specifically provided in any Supplemental Agreement,
amounts payable for Transition Services shall be charged at the service
provider's cost, it being the intent and agreement of the parties that the
service provider shall not make a profit on charges for Transition Services,
except as otherwise specifically agreed [CHECK WITH TAX: or to the extent the
billing for the Transition Service is made by a service provider located in one
country to a service recipient located in another, in which case any profit
shall be limited to the minimum amount required by applicable Law].
3.2 In the event a service recipient for any reason, or a service provider
in accordance with its rights under a Supplemental Agreement, elects to
terminate a Transition Service, the recipient shall be liable for charges for
such Transition Service performed accruing through the effective date of
termination.
3.3 Where practical (i.e., where Transition Service-related charges are
collected on Seller's financial systems) and unless otherwise provided in any
Supplemental Agreement, Seller will account for all charges to be paid by Buyer
to Seller and any charges to be paid by Seller to Buyer under this Agreement,
any Supplemental Agreement, and any similar service-related agreements through a
consolidated statement of account. As appropriate, such consolidated statements
may be prepared and
-5-
<PAGE>
administered on a country-specific basis reasonably agreed upon by Buyer and
Seller. To facilitate the generation of these consolidated statements, Buyer
shall collect Transition Service-related charges resident on Buyer financial
systems and promptly forward such information to Seller for inclusion in the
appropriate consolidated statement of account.
The consolidated statements shall include a summary of charges and a
report detailing each category of charges for the previous billing month. The
consolidated statements of account shall be issued no later than the fourteenth
working day following the month to which the statement of account applies.
Beginning on the Closing Date, Seller will issue the consolidated statements of
account on a monthly basis.
3.4 Statements issued pursuant to 3.3 shall be due and payable within
thirty (30) days from date of invoice, which shall be attached to the
consolidated statement. All charges are in U.S. dollars unless otherwise stated
and agreed by Buyer and Seller, and are net of any applicable taxes and fees
imposed by any Government Agency as a result of either party's use of any
services provided hereunder, which shall be such party's sole obligation to pay.
ARTICLE 4
COMMUNICATION AND ADMINISTRATION
4.1 Unless otherwise indicated in the relevant Supplemental Agreement, all
notices, approvals, and other communications required or permitted by this
Agreement to be given to Seller or Buyer shall be in writing and shall be
delivered (i) in person or by a reputable courier service that provides receipt
of delivery, (ii) by deposit in the U.S. or relevant country mail, postage
prepaid, by certified or registered mail, return receipt requested, provided,
however, the delivery of payment of routine invoices shall not be required to be
by certified or registered mail; (iii) by an internationally recognized
overnight courier service, or (iv) by facsimile delivery, confirmed, delivery in
accordance with subparagraphs (i) or (iii) above; in each case addressed to the
party concerned at its address or facsimile number as set forth below (or at
such other address as a party may specify by written notice pursuant to this
paragraph to the other party):
If to Perry: Perry
-----------
Dallas, Texas _______ (on-site deliveries), or
P.O. Box _______, Mail Station ____
Dallas, Texas ________ (U.S. mail delivery)
Attention:
Facsimile No.: 972-________
with a copy to: Perry
8505 Forest Lane, M/S 8658
P.O. Box 660199, M/S 8658
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<PAGE>
Dallas, TX 75266-0199 (U.S. mail delivery)
Attention: General Counsel MS 8658
Telecopy: (972) 480-5061
Perry
P.O. Box 650311, MS 3995
Dallas, Texas 75265
Attention: Manager, Corporate Development
Telecopy: (972) 917-3804
If to Buyer: Dixie
-----------
Attention:____________________
Facsimile No.:________________
with a copy to: Dixie
Attention:____________________
Telecopy No.:_________________
Communications sent by personal delivery, courier service, facsimile
transmission as set forth above shall be effective upon receipt, provided any
required confirmatory delivery is made. Communications sent by mail as set forth
above shall be effective ten (10) days after deposit in the U.S. mail; twenty
(20) days after deposit in non-U.S. mail.
ARTICLE 5
STANDARD OF CARE; DISCLAIMER
5.1 Each party hereby represents to the other and such party acknowledges
that the Transition Services to be performed hereunder and under each of the
Supplemental Agreements shall be performed in a professional and competent
manner.
5.2 EXCEPT AS EXPRESSLY SET FORTH IN A SUPPLEMENTAL AGREEMENT, SELLER AND
BUYER HEREBY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE
TRANSITION SERVICES (OR ANY SERVICES PROVIDED BY THIRD PARTIES WITH WHOM EITHER
PARTY CONTRACTS IN CONNECTION WITH THE PERFORMANCE OF THE TRANSITION SERVICES)
OR GOODS OR PRODUCTS FURNISHED IN CONNECTION THEREWITH. FURTHER, NEITHER SELLER
NOR BUYER REPRESENT
-7-
<PAGE>
AND HEREBY SPECIFICALLY DISCLAIM ANY WARRANTY THAT GOODS OR SERVICES FURNISHED
HEREUNDER WILL BE COMPLIANT WITH OR COMPREHEND THE YEAR 2000 CENTURY DATE
CHANGE. SUCH DISCLAIMER IS NOT INTENDED TO AFFECT ANY DIRECT CLAIMS EITHER PARTY
MAY ASSERT AGAINST ANY THIRD PARTY, NOR PREVENT THE PASS-THROUGH OR ASSIGNMENT
OR ANY RIGHTS EITHER PARTY MAY HAVE AGAINST ANY THIRD PARTY, AND, WITH RESPECT
TO YEAR 2000 MATTERS, TO EXPAND OR DIMINISH ANY OBLIGATIONS OF THE PARTIES SET
FORTH IN THE ACQUISITION AGREEMENT.
5.3 The Transition Service provider hereunder (and/or under a Supplemental
Agreements) shall use commercially reasonable efforts to obtain, for the benefit
of the service recipient, the Permits and/or Approvals required to be obtained
for the provision of such Transition Service, but such Transition Service
provider shall not be liable for its inability to provide such Transition
Service to the extent such failure results from the denial of necessary
governmental approvals and consents, if such Transition Service provider has
used all such commercially reasonable efforts to obtain such approval or
consent.
ARTICLE 6
INDEMNIFICATION
6.1 Except to the extent of the negligence or willful misconduct of Seller
or its Agents (as hereinafter defined), Buyer agrees to and shall defend,
indemnify, and hold harmless Seller and its Agents from and against any and all
third party claims, losses, liabilities, damages, fines, penalties, bodily
injury, sickness, disease, death, obligations, costs and expenses whatsoever
(including, without limitation, attorneys' fees, consultants' fees, experts'
fees and court costs for third party claims) to the extent arising out of (i)
the negligence of Buyer or its Agents, including, without limitation, their
negligence in the performance or failure to perform the Transition Services to
be performed by Buyer hereunder, or (ii) a third party claim by any employee,
independent contractor or invitee of Seller related to the Seller's provision of
Transition Services.
6.2 Except to the extent of the negligence or willful misconduct of Buyer
or its Agents, Seller agrees to and shall defend, indemnify, and hold harmless
the Buyer and its Agents from and against any and all third party claims,
losses, liabilities, damages, costs, fines, penalties, bodily injury, sickness,
disease, death, obligations, costs and expenses whatsoever (including, without
limitation, attorneys' fees, consultants' fees, experts' fees and court costs
for third party claims) arising out of the negligence of Seller or its Agents,
including, without limitation, (i) their negligence in the performance or
failure to perform the Transition Services to be performed by Seller hereunder,
or (ii) a third party claim by any employee, independent contractor or invitee
of Buyer related to the Buyer's provision of Transition Services.
6.3 The amount of any recovery, which a party seeking indemnification
hereunder shall be entitled to receive shall be offset by the amount of
insurance or other third party proceeds, if any, actually received by such party
in respect of such liability.
-8-
<PAGE>
6.4 EXCEPT AS RESULTING FROM A PARTY'S WILLFUL BREACH OF THIS AGREEMENT OR
A PARTY'S WILLFUL MISCONDUCT, NEITHER PARTY SHALL HAVE ANY LIABILITY TO THE
OTHER UNDER THIS AGREEMENT OR ANY SUPPLEMENTAL AGREEMENT FOR LOSS OF PRODUCT,
LOSS OF PROFIT, LOSS OF USE, OR ANY OTHER INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGE.
6.5 The indemnification obligations set forth herein or in any of the
Supplemental Agreements shall survive any termination of this Agreement.
[Prior to the closing, the parties' risk management departments will confer to
determine the appropriate insurance or self-insurance policy to be implemented
by the parties in connection with the Transition Services and the Supplemental
Agreements.]
ARTICLE 7
CONFIDENTIAL INFORMATION AND MATERIAL
7.1 Seller and Buyer shall maintain and treat as confidential and secret
all information and materials which may be disclosed by the other party in
connection with such party's performance of Services hereunder and identified in
writing thereon as being proprietary, confidential or secret (the "Confidential
Information").
7.2 Seller and Buyer shall not disclose the Confidential Information to
any third party, shall restrict disclosure of such information and material to
employees who have a need to know, and shall employ the same standard of care
each uses to protect its own proprietary, confidential or secret information and
material of like importance.
7.3 Notwithstanding the foregoing, a party may disclose Confidential
Information of the other party hereto to the extent that (a) disclosure is
compelled by judicial or administrative process or, in the opinion of the
disclosing party's counsel, by other requirements of law, or (b) such party can
show that such Confidential Information (i) was publicly available prior to the
date of this Agreement or thereafter becomes publicly available without any
violation of this Agreement on the part of such party or its employees, agents,
affiliates, associates or representatives, or (ii) became available to such
party from a person other than the other party hereto that is subject to any
legally binding obligation to keep such Confidential Information confidential.
7.4 The existence of this Agreement and any Supplemental Agreement and the
terms and conditions hereof or thereof shall not be disclosed by any party
without the prior written consent of the other parties (which shall not be
unreasonably withheld), or as may be required by law or as may be necessary to
establish a party's rights hereunder in a court of law or other legal
proceeding.
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<PAGE>
7.5 The obligations of this Article 7 shall survive the expiration or
termination of this Agreement.
-10-
<PAGE>
ARTICLE 8
TERM AND TERMINATION
8.1 This Agreement shall commence as of the Closing Date and shall remain
in effect for the Transition Period.
8.2 This clause shall not be deemed to waive, prejudice or diminish any
rights Buyer or Seller may have at law or in equity against any third party.
ARTICLE 9
FORCE MAJEURE
9.1 Neither party shall be responsible for any delay or failure in
performance or for any loss, damage, costs, charges and expenses incurred or
suffered by the other party by reason thereof if such delay or failure results
from the occurrence of an event beyond the reasonable control of such party and
without the fault or negligence of such party ("force majeure") including, but
not limited to, acts of God or the public enemy, acts of the Government in
either its sovereign or contractual capacity, fires, floods, epidemics,
quarantine restrictions, strikes, freight embargoes, unusually severe weather,
failure of suppliers, terrorism, or civil strife. If any party to this
Agreement is rendered wholly or partially unable by an event or force majeure to
carry out its obligations under this Agreement, and if that party gives prompt
written notice and full particulars of such event of force majeure to the other
party, the notifying party shall be excused from performance of its obligations
hereunder during the continuance of any inability so caused, but for no longer
period. Both parties shall use all commercially reasonable efforts to remove or
avoid the condition as soon as commercially practicable.
ARTICLE 10
GOVERNING LAW
10.1 This Agreement and the Supplemental Agreements shall not be governed
by the provisions of the 1980 United Nations Convention or Contracts for the
International Sale of Goods, but shall be governed by, construed and interpreted
and the rights of the parties determined in accordance with the laws of the
State of New York without regard to the choice of law principles thereof.
10.2 Seller and Buyer recognize that application of non-U.S. law to the
Agreement and/or the Supplemental Agreements (collectively, the "Transition
Agreements") could serve to frustrate the intent or expectations of the parties
as expressed therein (the "Intent"). Under such circumstances, the parties
agree to cooperate reasonably to make such changes in this Agreement and the
Supplemental Agreements, and to take such other actions as may be reasonably
necessary, to implement the Intent under any applicable non-U.S. law or in any
non-U.S. jurisdiction.
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<PAGE>
ARTICLE 11
ASSIGNMENT
11.1 Except as expressly provided in Section 2.3 hereof, no assignment of
this Agreement or any Supplemental Agreement by any party hereto shall be
permitted without the prior written consent to the other party, which consent
shall not be unreasonably withheld or delayed.
ARTICLE 12
ADDITIONAL DOCUMENTS
12.1 Each party shall promptly execute and deliver or cause to be executed
and delivered such additional documents, including but not limited to the
Supplemental Agreements, as are reasonably required by any other party for the
purpose of implementing this Agreement.
ARTICLE 13
GENERAL PROVISIONS
13.1 This Agreement, the Supplemental Agreements and the other Agreements
referred to herein constitute the entire Agreement between the parties with
respect to the subject matter hereof and supersede all previous communications,
representations, understandings and agreements, either written or oral, between
the parties.
13.2 If any provision of this Agreement or of any Supplemental Agreement
or the application thereof to any party or circumstance shall be held to be
invalid and unenforceable to any extent, the remainder of this Agreement or such
Supplemental Agreement or the application thereof to any other party or
circumstance shall not be affected thereby and each provision shall be valid and
shall be enforced to the highest extent permitted by law.
13.3 The parties hereto shall act in all matters pertaining to this
Agreement and the Supplemental Agreements as independent contractors and nothing
contained herein or in any of the Supplemental Agreements and no action taken
with respect to the provision of the Services shall constitute one party to be
the agent, partner or joint venturer of any other party for any purpose
whatsoever. Either party may delegate its obligations under this Agreement to
any subsidiary of said party.
13.4 This Agreement and any Supplemental Agreement shall be modified only
by an instrument in writing executed by duly authorized representatives of the
parties thereto.
13.5 A waiver of breach, delay or failure to take action with respect to
any previous default or failure by a party to fulfill its obligations under this
Agreement or any Supplemental Agreement shall not be deemed to constitute a
waiver of any other or subsequent default or failure by such party to fulfill
-12-
<PAGE>
such obligations and shall not constitute or be construed as a continuing waiver
and/or as a waiver of other subsequent defaults or breaches of the same or other
(similar or otherwise) obligations or as a waiver of any remedy available.
13.6 Words of any gender used in this Agreement or any Supplemental
Agreement shall be held and construed to include any other gender, and words in
the singular number shall be held to include the plural and vice versa, unless
the context requires otherwise.
13.7 The article headings and section captions of this Agreement or any
Supplemental Agreement are inserted for convenience only, and shall not be
deemed to constitute part thereof or to affect the construction thereof.
13.8 As used herein "Agents" means, with respect to any principal, the
officers, employees, servants, subsidiaries, agents of the principal and/or
other persons for whom the principal is legally responsible. Any other
capitalized term used, but not defined in this Agreement, shall have the meaning
given it in the Acquisition Agreement.
13.9 Nothing herein or in any Supplemental Agreement is intended to confer
on any person other than the Parties hereto or thereto any rights or remedies
under or by reason of this Agreement or any Supplemental Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the Closing Date.
PERRY DIXIE
By: ____________________________ By: ____________________________
Name: __________________________ Name: __________________________
Title: _________________________ Title: _________________________
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<PAGE>
Supplement 1(a)
FACILITIES TRANSITION SUMMARY
[Upon Closing, Buyer and Seller will occupy the following premises as
further described in the applicable Facilities Agreements]:
I. Seller will lease or sublease portions of the following Buyer
facilities (to be conveyed or assigned from Seller to Buyer at Closing):
Overlandlord Approx. Sq.Ftg.
subject to transition
Site Addresses (if applicable) lease/sublease
Avezzano Via Antonio Pacinotti 5/7 N/A
Nucleo Industriale
67051 Avezzano (AQ)
Bldg. 2
Singapore Singapore (PTE) LTD. Yes
990 Bendemeer Road
Singapore 1233
II. Buyer will lease or sublease portions of the following Seller
facilities:
Approx. Sq.Ftg.
Overlandlord subject to transition
Site Addresses (if applicable) lease/sublease
Jack Kilby 13570 N. Central Expy. N/A
Center (R&D1) Dallas, Texas 75243
East Bldg. 13353 N. Central Expy. N/A
Dallas, Texas 75243
DMOS 6 13011 Floyd Road N/A
Dallas, Texas 75265
Forest Lane 8505 Forest Lane N/A
Dallas, Texas 75243
Executive 8390 LBJ Frwy. Yes
Center I Dallas, Texas 75243
Executive Center II 8360 LBJ Frwy. Yes
Dallas, Texas 75243
Executive Center III 8330 LBJ Frwy. Yes
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Approx. Sq.Ftg.
Overlandlord subject to transition
Site Addresses (if applicable) lease/sublease
Dallas, Texas 75243
PAC Building Floyd Road South N/A
Dallas, Texas
Stafford (Houston) 12201 Southwest Freeway N/A
Stafford, Texas 77477
Bangalore, India Golf View Homes Yes
Wind Tunnel Road
Murugeshpalayam
Bangalore 560-017
India
Hsinchu, Taiwan 6 Creation 2ns Rd. Yes
Hsinchu Science Based
Industrial Park
Hsinchu, Taiwan, R.O.C.
Miscellaneous: Additional leases/ subleases Yes
of other real property owned or
leased by Seller Group
member in connection with the
Business, which is leased
pursuant to the [Facilities
Agreement] for the term stated
therein as agreed upon by
Buyer.
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EXHIBIT J
LIST OF CERTAIN EXCLUDED LIABILITIES
. Liabilities, Claims and Losses with respect to the Italian 1989 program
contract relating to Italian government subsidies.
. Taxes with respect to Italy to the extent a tax clearance certificate is
not obtained prior to Closing.
. Liabilities, Claims and Losses transferred to Italian Newco or Singapore
Newco to the extent transferred by Seller or any Affiliate of Seller to
such entity in violation of the terms of this Agreement.