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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 13, 1999
FSC SEMICONDUCTOR CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 333-26897 04-3363001
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
333 WESTERN AVENUE
SOUTH PORTLAND, MAINE 04106
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (207) 775-8100
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 13, 1999, Fairchild Semiconductor Corporation (the "Company"), a
wholly owned subsidiary of FSC Semiconductor Corporation ("Fairchild Holdings"),
completed the acquisition of the Power Device Business of Samsung Electronics
Co., Ltd. for an adjusted purchase price of approximately $407 million, subject
to certain post-closing adjustments. The purchase price was paid in the form of
a promissory note, which has been repaid in cash. The Power Device Business
designs, manufactures and markets power discrete semiconductors and standard
analog integrated circuits serving the personal computer, industrial,
telecommunications and consumer electronics markets. The transaction will be
accounted for as a purchase. The acquisition, which was effected by a wholly
owned South Korean subsidiary of the Company, includes substantially all of the
worldwide business and assets of the Power Device Business, including a
high-volume wafer fabrication plant in Bucheon, South Korea with approximately
1,200 design, development and manufacturing employees, and agreements for
assembly and test as well as other manufacturing, sales and marketing and
transitional services.
In connection with the acquisition, the Company refinanced all of its
existing Senior Credit Facilities aggregating approximately $201 million with a
portion of the proceeds of a new Senior Credit Facility with a syndicate of
banks led by Credit Suisse First Boston that provided for aggregate borrowings
at the closing of the acquisition of $310 million. The purchase price for the
acquisition was funded through a combination of the remaining proceeds from the
new credit facility, proceeds from the issuance of $300 million of new Senior
Subordinated Notes and a $50 million capital contribution from Fairchild
Holdings. Fairchild Holdings funded the capital contribution with the proceeds
of a $50 million subordinated loan from Citicorp Mezzanine Partners, L.P.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
It is impracticable to provide the required financial information at
the time of the filing of this report. The required financial
information will be filed by amendment to this form 8-K as soon as
practicable but not later than 60 days after April 28, 1999.
(b) PRO FORMA FINANCIAL INFORMATION
It is impracticable to provide the required pro forma financial
information at the time of the filing of this report. The required pro
forma financial information will be filed by amendment to this form
8-K as soon as practicable but not later than 60 days after April 28,
1999.
(c) EXHIBITS
2.1* Business Transfer Agreement dated December 20, 1998
2.2* Closing Agreement dated April 13, 1999
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* Pursuant to Item 601(b)(2) of Regulation S-K, the schedules and
exhibits to these exhibits are omitted. Exhibit 2.1 contains a
list of omitted schedules and exhibits. The Registrant agrees to
furnish supplementary copies of such schedules and exhibits to
the Commission upon request.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FSC Semiconductor Corporation
Date: April 27, 1999 By: /s/ Joseph R. Martin
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Joseph R. Martin
Executive Vice President, Finance
Chief Financial Officer
(Principal Financial and Accounting
Officer and Duly Authorized Officer
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Exhibit 2.1
BUSINESS TRANSFER AGREEMENT
THIS BUSINESS TRANSFER AGREEMENT (the "Agreement"), dated December 20,
1998, is by and between Samsung Electronics Co., Ltd., a corporation organized
under the laws of the Republic of Korea ("Seller"), and Fairchild Semiconductor
Corporation, a Delaware corporation ("Buyer").
WHEREAS, Seller is engaged in the Business (as defined) and owns the
Conveyed Assets (as defined);
WHEREAS, the parties hereto desire that Seller shall sell and transfer
to Buyer and Buyer shall purchase and acquire from Seller all of the Conveyed
Assets and Buyer shall assume all of the Assumed Liabilities (as defined), upon
the terms and conditions set forth herein; and
WHEREAS, the parties hereto agree that on and after the Transfer Date
(as defined), the Business be operated such that any economic benefit or
detriment of the ownership of the Conveyed Assets and the Assumed Liabilities
(including the Transferred Employees (as defined)) inure to the account of
Buyer.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein and the
agreements contemplated hereby, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used herein, unless the context otherwise requires, the following
terms (or any variant in the form thereof) have the following respective
meanings. Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa, and the reference to any gender shall be
deemed to include all genders. Unless otherwise defined or the context otherwise
clearly requires, terms for which meanings are provided herein shall have such
meanings when used in the Schedules hereto and each collateral document and
certificate executed or required to be executed pursuant hereto or thereto or
otherwise delivered, from time to time, pursuant hereto or thereto.
"Accounts Receivable" shall mean (i) all trade accounts receivable and
other rights to payment from customers of the Business and the full benefit of
all security for such accounts or debts, including all trade accounts receivable
representing amounts receivable in respect of goods shipped or products sold or
services rendered to customers of the Business, and (ii) all other accounts or
notes receivable representing amounts receivable in respect of goods shipped or
products sold or services rendered to customers of the Business relating to the
Business and the full benefit of all security for such accounts or notes, and
(iii) any claims, remedies and other rights related to any of the foregoing.
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"Action" means any litigation or legal or other action, arbitration,
counterclaim, investigation, proceeding, request for material information by or
pursuant to the order of any Governmental Authority, or suit at law or in
arbitration, equity or admiralty commenced by any Person.
"Additional Statements" mean (i) the unaudited statements of net assets
of the Business as of November 30, 1998 and September 30, 1998 and the unaudited
statements of revenues and operating expenses of the Business for the
twelve-month period ended November 30, 1998 and each of the nine-month periods
ended September 30, 1997 and 1998, in each case, adjusted to give pro forma
effect to the consummation of transactions contemplated hereby as though the
Closing Date had occurred, and such transactions had been consummated, on the
first day of the relevant period, including adjustments necessary to reflect on
a pro forma basis, the terms of the agreements referenced in Article V hereof
and (ii) the unaudited historical statements of net assets of the Business as of
November 30, 1998, September 30, 1998 and September 30, 1997 and the unaudited
historical statements of revenues and operating expenses of the Business for the
twelve-month period ended November 30, 1998 and each of the nine-month periods
ended September 30, 1998 and 1997.
"Adverse" or "Adversely" when used in conjunction with "Affect,"
"Change" or "Effect" shall mean, with respect to Seller or Buyer, whichever is
the obligor in the context to which such term applies, or the Business, as
applicable, any related events, conditions or circumstances which individually
or in the aggregate could reasonably be expected to (a) adversely affect the
enforceability of this Agreement by the obligee or (b) adversely affect the
assets, liabilities, properties, financial condition or results of operation of
Seller or Buyer, whichever is the obligor in the context to which such term
applies, or the Business, as applicable, or (c) impair the obligor's ability to
fulfill its obligations under the terms of this Agreement or (d) adversely
affect the aggregate rights and remedies of the obligee under this Agreement;
and, with respect to clauses (a)-(d), unless otherwise specifically set forth,
in a material respect or manner or to a material degree. "Materiality" as used
in this definition, unless specifically stated to the contrary, shall be
determined without regard to the fact that various provisions of this Agreement
set forth specific dollar amounts or the basis for calculating such amounts.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with, such Person, with
"control" for such purpose meaning the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
"Assigned Technology" means all Intellectual Property owned by Seller
on the Closing Date and used primarily in connection with the Business.
"Assumed Liabilities" means, other than Retained Liabilities, any and
all of the debts, losses, liabilities, claims, damages and obligations, whether
due or to become due, whether accrued, contingent or otherwise incurred by or
relating to the Business on or prior to the Closing Date in the ordinary course
of business, including (i) those reflected, reserved against or disclosed on the
Closing Balance Sheet (as defined), arising out of Contracts not fully performed
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as of the Closing Date, or attributable to the receipt, processing and return of
products in connection with customer returns or credits, (ii) those expressly
designated an Assumed Liability on any Schedule hereto, (iii) all liabilities
for deferred employee compensation except to the extent that the accrual for
such liabilities exceeds the sum of advances to employees and deposits for
deferred employee compensation by more than W4.4 billion; (iv) the liabilities
expressly assumed by Buyer pursuant to the provisions hereof, (v) all
liabilities for (A) Taxes, other than Income Taxes, attributable to the
operation of the Business accrued as a current liability and unpaid as of the
Transfer Date and (B) Income Taxes attributable to the operation of the Business
(determined without regard to any gain or loss recognized by Seller on Seller's
disposition of the Business) for any period following the Transfer Date, (vi)
except as set forth herein, accrued wages, benefits and other entitlements owed
to Employees but only to the extent they are reflected, disclosed or reserved on
the Closing Balance Sheet and (vii) any liabilities or obligations of Buyer
described in Section 4.2 hereof or for any other professional, financial
advisory or consulting, fees and expenses incident to or arising out of the
negotiation, preparation, approval or authorization of this Agreement and the
transactions contemplated hereby, including without limitation, the fees,
expenses and disbursements of Buyer's counsel and accountants.
"Balance Sheet" means the audited statement of net assets of the
Business as of June 30, 1998, including the notes thereto.
"Best Efforts" is defined to require that the obligated party make a
diligent, reasonable and good faith effort to accomplish the applicable
objective. Such obligation, however, does not require any significant
expenditure of funds or the incurrence of any significant liability on the part
of the obligated party, nor the incurrence of any expenditure or liability which
is unreasonable in light of the related objective, nor does it require that the
obligated party act in a manner which would otherwise be contrary to prudent
business judgment or normal commercial practices in order to accomplish the
objective. The fact that the objective is not actually accomplished is no
indication that the obligated party did not in fact utilize its Best Efforts in
attempting to accomplish the objective.
"Bucheon Facility" means the land, building and improvements
constituting the wafer fabrication facilities existing and owned or held on the
date hereof by Seller at Bucheon factory, Kyungki-Do, Korea, as detailed in
Schedule I hereto.
"Business" shall mean the business of developing, manufacturing and
selling (but expressly excluding for purposes of this definition, epi assembly
and final testing) the full range of MOSFETs, power transistors (including Small
Signal TRS and Power TRS), diodes, motor ICs, standard linear ICs, SPS, IGBT and
other power devices (except for a range of multimedia products described in the
Foundry Sale Agreement (as defined) which are not transferred pursuant to this
Agreement) as conducted on the Closing Date by Seller.
"Business Product" means any MOSFET, power transistor (including Small
Signal TRS and Power TRS), diode, motor IC, standard linear IC, SPS, IGBT or
other power device manufactured, marketed, under design or development or sold
by the Business on the Closing
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Date, or historically manufactured by the Business, or any Derivative Product
derived or based upon any of the foregoing.
"Cash" means cash, time deposits, certificates of deposit and other
cash equivalents, excluding customer deposits, deposits for deferred employee
compensation and restricted cash.
"Closing" means the consummation of the transactions contemplated by
Section 2.1 hereof.
"Closing Date" means the later of (i) the third business day after
expiration or termination of all waiting periods prescribed under the HSR Act
and the FTA, and (ii) the date on which the conditions set forth in Articles IX
and X shall be satisfied or duly waived; provided, however, that if Seller and
Buyer mutually agree on a different date, the Closing Date shall be the date
upon which they have mutually agreed.
"Code" means the Korean Tax Code, as amended, and any successor
thereto.
"Contract" means any written note, bond, mortgage, indenture, lease,
contract, instrument, license, agreement, sales order, purchase order, open bid
or other obligation or commitment and all rights therein.
"Conveyed Assets" means, other than Excluded Assets, (i) all of the
tangible personal property owned or held by Seller and located within the
premises of the Bucheon Facility and (ii) all of the other assets, property and
rights owned or held by Seller and employed for the purpose of conducting the
Business, whether characterized as tangible or intangible, real, personal or
mixed, fixed, contingent or otherwise, wherever such may be located, in both
cases consisting of:
(a) real property interests (including leases), land, plants,
buildings, improvements and accessories set forth on Schedule II hereto;
(b) machinery, equipment, vehicles, furniture and fixtures, leasehold
improvements, supplies, repair parts, tools, plant, laboratory and office
equipment and other tangible personal property, together with any rights or
claims arising out of the breach of any express or implied warranty by the
manufacturers or sellers of any of such assets or any component part thereof;
(c) inventories, including raw materials, work-in-process, goods in
transit and finished goods wherever located;
(d) notes, loans and Accounts Receivable (except to the extent
specified in clause (b) of the definition of "Excluded Assets"), interests as
beneficiary under letters of credit, advances and performance and surety bonds;
(e) financial, accounting and operating data and records, including
books, records, electronic data, notes, sales and sales promotional data,
advertising materials, credit information, cost and pricing information,
customer and supplier lists, reference catalogs, payroll and personnel records
and other similar information;
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(f) Assigned Technology;
(g) Contracts;
(h) prepaid expenses, deposits and retentions held by third parties and
Cash held for deferred employee compensation, if any;
(i) originals (or to the extent required by applicable Laws to be
retained by Seller, copies) of (A) all customer and vendor lists relating
primarily to the Business; (B) all files and documents (including credit
information) relating primarily to customers and vendors of the Business; and
(C) all other business, personnel and financial records, files, books and
documents (whether in hard copy or computer format) relating primarily to the
Business;
(j) Licenses and the immunities granted to Buyer pursuant to Section
5.9 hereof;
(k) claims, causes of action, choses in action, rights of recovery,
rights of set-off, and rights of subrogation to the extent that such items arise
out of any Conveyed Assets;
(l) any property owned by Seller and consigned to a third-party to
support assembly and test operations relating to the Business;
(m) any assets, property or rights reflected on the Balance Sheet
except inventory disposed of in the ordinary course of business prior to the
Closing; and
(n) goodwill and going concern value of the Business other than that
attributable to Seller or any of its Affiliates or Seller's ownership,
management and control of the Business and other than that attributable to
Samsung Trademarks and trade names.
"Copyrights" means all copyrighted works in any country, whether
registered or unregistered, applications for copyright registrations and
application specific software (e.g., net lists).
"Derivative Product" means any product that (i) was derived from or
based upon a Business Product or fulfills substantially the same function as a
Business Product (as determined from said product's data sheet), (ii) was
designed by or for the Business and (iii) involves or embodies the Assigned
Technology or Samsung Licensed IP, in each case, to the extent such product does
not compete, directly or indirectly, with any product of Seller or any of its
Affiliates.
"Employee" means any individual who as of the Closing Date shall be an
employee of Seller who performs services primarily on behalf of the Business.
"Employee Benefit Plan" means an employee pension benefit plan, an
employee welfare benefit plan or any bonus, incentive compensation, profit
sharing, retirement, pension, group insurance, death benefit, health, cafeteria,
flexible benefit, medical expense reimbursement, dependent care, stock option,
stock purchase, stock appreciation rights, savings, deferred
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compensation, consulting, severance pay or termination pay, vacation pay, life
insurance, welfare or other employee benefit or fringe benefit plan, program or
arrangement.
"Entity" means any Person other than a natural person.
"Environmental Law" shall mean any applicable Law or Order as in effect
at the Closing Date relating to the protection of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface or subsurface land), including the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing, handling,
labeling, recycling, release or disposal of, hazardous substances.
"Environmental Liability" means the claims, liabilities and losses
resulting from or relating to (a) the failure to comply with any requirement of
an Environmental Law; (b) the failure to obtain or comply with any required
Environmental Permit; (c) a Remediation; (d) a Release; or (e) harm or injury to
any real property (other than a Remediation), to any person, to public health,
or natural resource as a result of exposure to Hazardous Substances.
"Environmental Permits" means a permit, approval, authorization,
license, variance, registration or permission held by Seller pursuant to an
Environmental Law.
"Excluded Assets" means:
(a) Cash (other than prepaid expenses and Cash held in respect of
severance payments);
(b) all intercompany receivables (other than the trade receivables and
other rights to payment and any security, claims and other rights relating
thereto falling within clauses (i) and (ii) of the definition of Accounts
Receivable);
(c) all losses, loss carry forwards and rights to receive refunds,
credits and credit carry forwards with respect to any and all Taxes, to the
extent attributable to a taxable period ending on or prior to the Closing Date,
including, without limitation, interest thereon, whether or not the foregoing
are derived from the Business;
(d) the corporate books and records, stock records and corporate seal
(chop) of Seller; ledger books and all other books and records which Seller is
required by applicable Law to retain;
(e) the trademark, logo and product code of Seller;
(f) all property and assets expressly designated in Schedule III; and
(g) Intellectual Property not related primarily to the Business.
"FTA" shall mean the Monopoly Regulations and Fair Trade Act of Korea
and enforcement decrees and regulations issued thereunder.
"GAAP" shall mean U.S. generally accepted accounting principles.
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"Governmental Authorization" means any approval, concession, consent,
franchise, license, permit, plan, registration or other authorization of any
Governmental Authority.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any federal, state, local or foreign Entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any government authority,
agency, department, board, commission, or instrumentality and any tribunal or
arbitral authority of competent jurisdiction, and any self-regulatory
organization.
"Hazardous Substance" means any material, substance or waste that
causes any damage to property or personal injury, including death, or threat to
the environment, including without limitation, those substances defined, listed,
designated or classified as hazardous, toxic, radioactive, or dangerous or
otherwise regulated or governed under any applicable environmental requirements,
including without limitation, any petroleum product or by-product, crude oil or
any fraction thereof, natural gas, natural gas liquids, liquefied natural gas,
synthetic gas usable as fuel, polychlorinated biphenyls, caustic, chlorine or
chlorine-based compounds.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Income Taxes" means federal, state or local income or franchise taxes
or other taxes measured by income and all other taxes reported on Tax Returns
which include federal, state, local or foreign income or franchise taxes or
other taxes measured by income, together with any interest or penalties imposed
with respect thereto.
"Intellectual Property" means Patents, Invention Disclosures,
Trademarks, Mask Works, Copyrights and Know-How.
"Invention Disclosures" means unfiled invention disclosures.
"Know-How" means know-how, technology, processes, methods,
manufacturing procedures, trade secrets, technical information, information
related to packaging designs, product designs and products in development,
information related to software source code, documentation therefor, notebooks
and drawings, and information contained in Invention Disclosures and pending
applications that are not Patents.
"Knowledge" (including the term "to the knowledge of') means, with
respect to (i) the Seller, the actual knowledge of the president, any vice
president or the chief financial officer of Seller or the Persons named on
Schedule IV hereto, including Messrs. D.J. Kim, S. Kim, S.W. Shin and Y.I. Choi,
and (ii) any other Entity, the actual knowledge of the executive officers of
such Entity, in case of either clause (i) or (ii), after reasonable
investigation (other than with respect to environmental matters and intellectual
property matters, as to which no separate investigation beyond normal inquiry of
employees has been made).
"Korea" means the Republic of Korea.
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"Korean GAAP" means generally accepted accounting principles in effect
in Korea.
"Laws" means statutes, regulations, ordinances, rules and other laws
promulgated by a Governmental Authority.
"Licenses" means permits, registrations, approvals, franchises or other
authorizations including without limitation authorizations with respect to
patents, patent applications, trademarks, service marks, trade names,
copyrights, computer software programs, technology, trade secrets and know-how,
and means, when used as a verb, the act of granting a License.
"Libor Rate" means the U.S. Dollar rate (rounded upward to the nearest
one-sixteenth of one percent (1/16%) listed on Telerate page 3750 (i.e., the
Libor page) of the Bridge Information Systems service titled British Banker
Association Interest Settlement Rates for a designated maturity of one (1) month
determined as of 11:00 a.m., London time, on the second (2nd) full Eurodollar
business day next preceding the first day of each month with respect to which
interest is payable hereunder (unless such date is not a business day in which
event, the next succeeding Eurodollar business day which is also a business day
will be used).
"Lien" means an adverse claim, restriction on voting or transfer or
pledge, lien, mortgage, hypothecation, collateral assignment, charge,
encumbrance, easement, covenant, restriction, title defect, encroachment or
security interest of any kind.
"Mask Works" means all mask works of any country, whether registered or
unregistered and applications for mask work registration.
"Orders" means judgments, orders, injunctions, decrees, stipulations or
awards (whether rendered by a court, administrative agency, arbitrator or other
tribunal) and whether imposed or entered by consent.
"Patents" means patents, patent applications, and industrial design
registrations, together with any continuations, continuations-in-part or
divisional applications thereof, and all patents issuing thereon (including
reissues, renewals and reexaminations of the foregoing).
"Permitted Liens" means any Liens (i) for Taxes attributable to any
taxable period beginning on or prior to the Closing Date and not yet due or
payable or being contested in good faith and for which appropriate reserves have
been established on the Closing Balance Sheet, (ii) that are not material and
constitute mechanics', carriers', workers' or like liens incurred in the
ordinary course of business, or (iii) utility easements, encroachments and other
imperfections in title that individually or in the aggregate do not Adversely
Affect the use or value of the property.
"Person" means a natural person, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
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"Purchase Price" means, subject to Section 5.4(d)(vi) and Section
5.26, Four Hundred Fifty-Five Million Dollars ($455,000,000), plus any
applicable VAT, representing the aggregate consideration to be paid by Buyer on
the Closing Date pursuant hereto, before giving effect to any adjustments
pursuant to Sections 2.4 and 5.26 hereof; provided, however, that to the extent
required by applicable law, the portion of the Purchase Price (which would
otherwise be payable in U.S. dollars) relating to goodwill shall be payable in
Korean Won in an amount determined at an exchange rate equal to the midrate
quoted by the Korea Exchange Bank at the time of payment; provided, further,
that Seller acknowledges and agrees that it is Buyer's intention that a Korean
subsidiary of Buyer will acquire the Conveyed Assets and assume the Assumed
Liabilities and pay the Purchase Price hereunder.
"Remediation" means any investigation, clean-up or other response
action in connection with the presence or Release of Hazardous Substances.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment.
"Retained Liabilities" means any and all of the debts, losses,
liabilities, claims, damages and obligations, whether due or to become due,
whether accrued, contingent or otherwise, incurred by or relating to the
Business on or prior to the Closing Date other than in the ordinary course of
business, including:
(i) contingent liabilities not disclosed in any Schedule
hereto or in the Balance Sheet;
(ii) all liabilities and obligations arising out of, resulting
from or relating to claims, whether founded upon negligence, strict liability in
tort or other similar legal theory, seeking compensation or recovery for or
relating to injury to person or damage to property arising out of the conduct of
the Business;
(iii) product warranty claims other than for repair or
replacement of or credit for customers with respect to the Business;
(iv) liabilities with respect to Excluded Assets;
(v) the liabilities expressly retained by Seller pursuant to
the provisions hereof, including liabilities for Taxes retained by Seller under
Article VII or expressly designated as Retained Liabilities on Schedule V
hereto;
(vi) liabilities relating to retention payments to Employees,
agreed to be paid on or prior to the Closing Date;
(vii) any intercompany loans account;
(viii) all Employee liabilities to the extent relating to the
period prior to the Closing Date other than (A) accrued wages, benefits and
entitlements owed to Employees and
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(B) liabilities for Unfunded Severance Liabilities in respect of Employees in an
amount not to exceed W4.4 billion;
(ix) liabilities arising from any claim or allegation first
arising prior to the Closing Date, including, without limitation, claims
existing on the date hereof with International Rectifier, Northern Telecom, SGS
Thompson and Rohm;
(x) capitalized lease obligations; and
(xi) any liabilities or obligations of Seller described in
Section 3.13 hereof or for any other professional, financial advisory or
consulting fees and expenses incident to or arising out of the negotiation,
preparation, approval or authorization of this Agreement and the transactions
contemplated hereby, including without limitation, the fees, expenses and
disbursements of Seller's counsel and accountants (including accountants' fees,
expenses and disbursements in connection with the preparation of the Financial
Statements, but excluding the fees and expenses contained in the proviso in
Section 13.4).
"Samsung Licensed IP" has the meaning set forth in Section 3.5(b).
"Schedule" means any Schedule hereto.
"Seller Benefit Plans" shall mean each Employee Benefit Plan maintained
or contributed to by Seller for the benefit of any Employees other than plans,
programs or arrangements required to be maintained or contributed to by the Laws
of Korea or any other relevant jurisdiction.
"Tax" or "Taxes" shall mean all taxes, charges, duties, fees, levies or
other assessments, including income, corporation, excise, property, sales, value
added, gross receipts, profits, gains, license, withholding (with respect to
compensation or otherwise), payroll, employment, unemployment, disability,
wealth, welfare, net worth, capital gains, purchase, transfer, stamp,
registration, social security, environmental, occupation, franchise, alternative
minimum, estimated or other similar taxes, imposed by any Governmental
Authority, and including any interest, penalties and additions attributable
thereto.
"Tax Claim" shall have the meaning set forth in Section 7.6(a).
"Tax Return" or "Tax Returns" shall mean any return, report,
declaration, information return, statement or other document filed or required
to be filed with any Governmental Authority, in connection with the
determination, assessment or collection of any Tax or the administration of any
Laws relating to any Tax.
"Third-Party Claim" means any Action by or before any Governmental
Authority asserted by a Person other than any party hereto or their respective
Affiliates which gives rise to a right of indemnification hereunder.
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"Third-Party Licensed IP" means the Intellectual Property which has
been previously licensed to Seller by third parties in connection with the
Business pursuant to license agreements which are in force as of the Closing
Date; provided, however, that Third-Party Licensed IP does not include
commercial off-the-shelf software which is used by Seller pursuant to
company-wide agreements.
"Trademarks" means registered and unregistered trademarks, service
marks, trade names, and applications for any of the foregoing.
"Transfer Date" means 11:59 p.m. (Seoul time) on December 31, 1998.
"Transferring Employee" means an Employee who shall accept an offer of
employment from Buyer, whether or not such Employee works for Buyer or any of
its Affiliates at least one day.
"Unfunded Severance Liability" means deferred employee compensation
liability less deposits for deferred employee compensation less advances to
employees, in each case, as reflected on the Closing Balance Sheet.
"Working Capital of the Business" shall mean the current assets (except
for prepaid expenses relating to Intellectual Property Licenses which are not
used in connection with the Business) less the current liabilities (except for
accrued expenses relating to Intellectual Property Licenses which are not used
in connection with the Business) of the Business, determined in accordance with
GAAP on a basis consistent with the preparation of the Balance Sheet provided
that there shall be excluded from such determination the Excluded Assets and the
Retained Liabilities.
ARTICLE II
PURCHASE AND SALE; CLOSING
Section 2.1 PURCHASE AND SALE. Upon the terms and conditions set forth
herein, at the Closing, Seller shall sell, convey, assign and transfer to Buyer
and Buyer shall purchase, acquire and accept from Seller, free and clear of all
Liens, other than Permitted Liens, the Conveyed Assets and Buyer shall assume
the Assumed Liabilities (the payment of the Purchase Price and the assumption of
the Assumed Liabilities collectively referred to as the "Consideration").
Section 2.2 CLOSING DOCUMENTS. At the Closing:
(a) Seller will deliver or cause to be delivered to Buyer the
instruments and documents set forth in Exhibit A.
(b) Buyer shall pay by wire transfer the Purchase Price in immediately
available funds to the account specified by Seller and assume the Assumed
Liabilities and deliver or cause to be delivered to Seller the instruments and
documents set forth in Exhibit B; and
(c) Seller and Buyer shall deliver the certificates and other documents
required to be delivered under Articles IX and X hereof (together, with the
other documents specified in Sections 2.2(a) and 2.2(b) hereof, the "Closing
Documents").
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Section 2.3 TIME AND PLACE OF CLOSING. The Closing shall take place on
the Closing Date at 10:00 a.m., local time, at the offices of Seller in Seoul,
Korea, or such other place or time as the parties may agree.
Section 2.4 PURCHASE PRICE ADJUSTMENT.
(a) Within thirty (30) days after the Closing Date, Seller shall
deliver to Buyer a balance sheet of the Business as of the Transfer Date (the
"Closing Balance Sheet"), including a statement of the Working Capital of the
Business as of the Transfer Date (the "Working Capital Statement"). The Closing
Balance Sheet and Working Capital Statement shall be audited in accordance with
GAAP, the cost and expense of which shall be borne by Buyer; provided that
Seller shall have first prepared, at its cost and expense, an audited balance
sheet as of the Transfer Date and a statement of Working Capital of the Business
as of the Transfer Date prepared in accordance with Korean GAAP; provided,
however, that such costs and expenses to be borne by Seller shall not be treated
as expenses of the Business for purposes of the net income before Income Tax
calculations to be made pursuant to Section 5.26 hereunder. The Closing Balance
Sheet shall fairly present the financial position of the Business and shall be
prepared using the same accounting methods, policies, practices and procedures
with consistent classifications, judgments, and valuation and estimation
methodologies as used in the calculation of such items on the Balance Sheet
except that (i) reserves shall not be reduced for reasons other than in respect
of cash payments since the date of the Balance Sheet and (ii) for purposes of
the Working Capital Statement, current assets shall be increased by an amount
equal to the reduction in Loans to Employees during the period between June 30,
1998 and the Transfer Date, to the extent such reduction resulted in a decrease
during such period in current assets and a corresponding decrease during such
period in long-term liabilities that are Assumed Liabilities related to employee
severance payments. Buyer shall provide Seller with access to the books,
records, and personnel of the Business necessary for Seller to prepare the
Closing Balance Sheet and Working Capital Statement.
(b) Buyer may dispute the amounts reflected on the line items of the
Closing Balance Sheet and Working Capital Statement (a "Disputed Item"), but
only on the basis that (i) an entry is based on facts or occurrences arising
solely between June 30, 1998 and the date of the Closing Balance Sheet and
Working Capital Statement, and (ii) a Disputed Item does not reflect, or has not
been made in a manner consistent with, the provisions of this Agreement;
provided, however, that Buyer shall notify Seller in writing of each Disputed
Item, and specify the amount thereof in dispute and the basis therefor, within
forty (40) days after receipt of the Closing Balance Sheet and Working Capital
Statement. The failure by Buyer to provide a notice of Disputed Items to Seller
within such forty (40) day period will constitute Buyer's acceptance of all the
items in the Closing Balance Sheet and Working Capital Statement.
(c) If a notice of Disputed Items shall be timely delivered pursuant to
subclause (b) above, Seller and Buyer shall, during the thirty (30) Business
Days following the date of such delivery (the "Resolution Period"), negotiate in
good faith to resolve the Disputed Items. If, during such Resolution Period, the
parties are unable to reach agreement, Seller and Buyer shall refer all
unresolved Disputed Items to Arthur Andersen LLP or such other independent
accounting firm as Seller and Buyer shall mutually agree upon (the "Independent
Accountant"). The Independent Accountant shall make a determination, acting as
an expert and not as an
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arbitrator, with respect to each unresolved Disputed Item within forty-five (45)
days after its engagement by Seller and Buyer to resolve such Disputed Items
which determination shall be made in accordance with the rules set forth in this
Section 2.4. The Independent Accountant shall deliver to Seller and Buyer,
within such forty-five (45) day period, a report setting forth its adjustments,
if any, to the Closing Balance Sheet or Working Capital Statement and the
calculations supporting such adjustments. Such report shall be final, binding on
the parties and conclusive. Seller and Buyer shall each pay one-half of all the
costs incurred in connection with the engagement of the Independent Accountant.
As used herein, "Closing Working Capital" shall mean (i) if no notice of
Disputed Items is delivered by Buyer within the period provided in subclause (b)
above, the Working Capital of the Business as shown in the Working Capital
Statement as prepared by Seller, or (ii) if such a notice of Disputed Items is
delivered by Buyer, either (x) the Working Capital of the Business as agreed to
in writing by Seller and Buyer, or (y) the Working Capital of the Business as
shown in the Independent Accountant's calculation delivered pursuant to this
subclause (c).
(d) If the Closing Working Capital is less than the Working Capital of
the Business as set forth on the Balance Sheet, then Seller shall, within ten
(10) days after the determination of the Closing Working Capital, pay to Buyer,
by wire transfer of immediately available funds in accordance with written
instructions given to Seller by Buyer, the amount of such shortfall in U.S.
dollars, together with interest on such amount from the Closing Date to the date
of such payment at a rate equal to the Libor Rate plus 200 basis points. If the
Closing Working Capital is greater than the Working Capital of the Business as
set forth on the Balance Sheet, then Buyer shall, within ten (10) days after the
determination of the Closing Working Capital, pay to Seller, by wire transfer of
immediately available funds in accordance with written instructions given by
Seller to Buyer, the amount of such excess in U.S. dollars, plus any applicable
VAT, together with interest on such amount from the Closing Date to the date of
such payment at a rate equal to the Libor Rate plus 200 basis points.
Section 2.5 ALLOCATION OF THE CONSIDERATION. Seller and Buyer covenant
to use their respective Best Efforts to, on or prior to the Closing Date, agree
on the allocation of the Consideration to be set forth in Schedule 2.5, subject
to such adjustment as Seller and Buyer may agree to reflect any adjustment to
the Purchase Price pursuant to Section 2.4. If Seller and Buyer fail to reach
agreement on the adjustment of the allocation of the Consideration (as adjusted)
within thirty (30) days after the date of any payment pursuant to Section
2.4(d), the allocation of Consideration (as adjusted) shall be adjusted pro rata
for each category of assets reflected in Schedule 2.5 (the allocation of the
Consideration, as so adjusted, is hereinafter referred to as the "Allocation").
Seller, on the one hand, and Buyer, on the other, shall (i) be bound by any
Allocation for purposes of determining any Taxes, (ii) prepare and file its Tax
Returns on a basis consistent with any Allocation, and (iii) take no position
inconsistent with any Allocation on any applicable Tax Return or in any Action
before any Governmental Authority or otherwise. In the event that the Allocation
is disputed by any Governmental Authority, the party receiving notice of the
dispute shall promptly notify the other party hereto concerning resolution of
the dispute. Seller and Buyer acknowledge that the Allocation will be prepared
at arm's length based upon a good faith estimate of fair market values.
Section 2.6 NONASSIGNABLE CONTRACTS. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any claim,
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contractual obligation, Governmental Authorization, lease, commitment, sales,
service or purchase order, or any claim, right or benefit arising thereunder or
resulting therefrom, if the transfer of the Conveyed Assets to Buyer would be
deemed an attempted assignment thereof without the required consent of a
third-party thereto and would constitute a breach thereof or in any way affect
the rights of Seller or Buyer thereunder. If such consent is not obtained, or if
the transfer of the Conveyed Assets to Buyer would affect the rights of Buyer
thereunder so that Buyer would not in fact receive the benefit of all such
rights, Seller shall use its best efforts to cooperate with Buyer in any
arrangement designed to provide for the benefits thereof to Buyer, including
subcontracting, sublicensing or subleasing to Buyer or enforcement for the
benefit of Buyer of any and all rights of Seller against a third-party thereto
arising out of the breach or cancellation by such third-party or otherwise; and
any assumption by Buyer of obligations thereunder whether by operation of Law or
in connection with the transfer of the Conveyed Assets to Buyer which shall
require the consent or approval of any third-party shall be made subject to such
consent or approval being obtained.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
Section 3.1 INCORPORATION; AUTHORIZATION; CAPITALIZATION; ETC.
(a) Seller is duly organized and validly existing under the laws of
Korea and is in good standing and qualified (with all requisite power and
authority) to transact business in each jurisdiction in which the nature of
property owned or leased by it in the conduct of the Business requires it to be
so qualified, except where the failure to be in good standing or to be duly
qualified to transact business, would not, individually or in the aggregate,
reasonably be expected to have an Adverse Effect on the Business.
(b) Seller has all requisite power and authority to own the Conveyed
Assets, to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. Seller has all requisite power and authority to carry on
the Business as it is now being conducted. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate proceedings on the part
of Seller. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (i)
violate any provision of Seller's certificate of incorporation or bylaws, (ii)
except as disclosed in Schedule 3.1(b) hereto, violate or conflict with any
provision of, or be an event that is (or with the passage of time will result
in) a violation of or conflict with, or result in the acceleration of or entitle
any Person to accelerate or cancel (whether after the giving of notice or lapse
of time or both) any obligation under, or result in the imposition of any Lien
upon any of the Conveyed Assets, pursuant to any Contract or Order to which
Seller is a party or by which Seller is bound or (iii) except as listed on
Schedule 3.1(b), violate or conflict with any other material restriction of any
kind or character to which Seller is subject, that, in the case of clauses (ii)
or (iii), would, individually or in the aggregate, reasonably be expected to
Adversely Affect the Business. This Agreement has been duly executed and
delivered by Seller and, assuming the due execution
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hereof by Buyer, this Agreement constitutes the legal, valid and binding
obligation of Seller, enforceable in accordance with its terms.
Section 3.2 FINANCIAL STATEMENTS. Attached hereto as Schedule 3.2 are
true and complete copies of the audited statements of net assets of the Business
as of December 31, 1996 and 1997 and June 30, 1998 and the statements of
revenues and operating expenses of the Business for the years ended December 31,
1995, 1996 and 1997 and the six months ended June 30, 1998 (collectively, the
"Financial Statements"). As of the respective dates thereof, the Financial
Statements fairly present in all material respects the financial position and
results of operations of the Business in accordance with GAAP.
Section 3.3 UNDISCLOSED LIABILITIES. Except for the Assumed
Liabilities, the Business has no liabilities or obligations that would
reasonably be expected to have an Adverse Effect on the Business.
Section 3.4 PROPERTIES; SUFFICIENCY OF ASSETS.
(a) With the exception of properties disposed of in the ordinary course
of business since the date of the Balance Sheet, Seller has (or will have prior
to the Closing Date) and upon consummation of the transactions contemplated
hereby, Buyer will have, good and marketable title to, all real and tangible
personal property constituting Conveyed Assets, free and clear of all Liens
except Permitted Liens.
(b) Except for (i) the Excluded Assets, (ii) assets disposed of by
Seller prior to the date of the Balance Sheet, (iii) assets disposed of in the
ordinary course of business since the date of the Balance Sheet and (iv)
Intellectual Property not constituting Conveyed Assets, the Conveyed Assets
constitute or will constitute as of the Closing Date all of the assets used or
employed for the purpose of conducting the Business.
(c) Except as set forth in Schedule 3.4(c), the Conveyed Assets do not
include any ownership interest in a corporation or partnership (or other entity
treated as a corporation or partnership for U.S. income tax purposes) or in any
debt or equity security of any other person or entity.
(d) The Conveyed Assets have been or are currently in use in connection
with the Business.
(e) On the Closing Date, all of the real property (whether leased or
owned) included in the Conveyed Assets (the "Real Property") will be free and
clear of any and all encumbrances of record or not of record which either
individually or in the aggregate, could prohibit or materially adversely
interfere with Buyer's use of such property except for Permitted Liens. No
material default or breach exists under any of the covenants, conditions,
restrictions, rights-of-way or easements, if any, affecting all or any portion
of the Real Property.
(f) Except as set forth in Schedule 3.4(f), the current zoning and
other similar regulations applicable to the Real Property permits the operator
of such property to use such property for the Buyer's intended use thereof in
all material respects, provided that such use is substantially similar to
Seller's use thereof. Except as set forth in Schedule 3.4(f), Seller has not
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made any application for a rezoning of any Real Property. To Seller's knowledge,
there is no proposed or pending change to any zoning regulations materially
affecting any of the Real Properties.
(g) Except as set forth in Schedule 3.4(g), all utilities, including
without limitation, potable water, sewer, gas, electric, telephone, and other
public utilities and all storm water drainage required by law or necessary for
the operation of the Real Property, (i) either enter such properties through
open public streets adjoining them, or, if they pass through adjoining private
land, do so in accordance with valid public or private easements or rights of
way which will inure to the benefit of Buyer the failure of which would not,
individually or in the aggregate, have an Adverse Effect, (ii) are installed,
connected, operating and adequate, in all material respects, for the operation
of the Business as it has been previously conducted by Seller, with all
installation and connection charges paid in full, including, without limitation,
connection and the right to discharge sanitary waste into the collector system
of the appropriate sewer utility, and (iii) are adequate (in both quality and
quantity) to service, in all material respects, the Real Properties for their
respective use in the Business as presently conducted thereon;
(h) Each Real Property is located along one or more dedicated public
streets or has access thereto and all curb-cut and street-opening permits or
licenses required for vehicular access to and from such properties to any
adjoining public street or to any parking spaces utilized in connection with
them have been obtained and paid for, are in full force and effect and shall
inure to the benefit of Buyer, in each case, the failure of which would not,
individually or in the aggregate, have an Adverse Effect.
(i) The improvements located on the Real Property, including the roof,
structure, soil, elevators, walls, heating, ventilation, air conditioning,
plumbing, electrical, drainage, fire alarm, communications, security and exhaust
systems and their component parts, or other improvements on or forming a part of
such properties, are adequate in all material respects for the operation of the
Business as it has been previously conducted by Seller. Seller has not received
any notification of and there are no outstanding or incomplete work orders in
respect of any of the buildings, improvements or other structures constructed on
the Real Properties or of any current non-compliance with applicable statutes
and regulations or building and zoning laws and regulations which, individually
or in the aggregate, would have an Adverse Effect.
Section 3.5 INTELLECTUAL PROPERTY.
(a) Schedule 3.5(a) hereto contains a complete and correct list
(subject to Section 3.5(f)), as of the date hereof, of all Patents,
registrations of Trademarks, registrations of Copyrights and registrations of
Mask Works and applications for any of the foregoing primarily used in
connection with the Business, which are owned by Seller and which, in each case,
are included among the Assigned Technology, specifying as to each item, as
applicable, (i) the jurisdiction in which the item is issued or registered,
including the respective issuance or registration number and (ii) the filing
date and, in the case of issued patents, the expiration date. All such Patents,
registrations of Trademarks, registrations of Copyrights and registrations of
Mask Works included in Schedule 3.5(a) hereto are in full force, all maintenance
fees thereon due prior to thirty (30) days after the Closing Date have been paid
or will be paid by the Closing Date, and to Seller's knowledge, as of the date
hereof, none of such Patents, Trademarks,
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Copyrights or Mask Works is subject to any cancellation or reexamination
proceeding or any other actual or threatened proceeding challenging its scope or
validity.
(b) Schedule 3.5(b) hereto contains a complete and correct list as of
the date hereof (subject to Section 3.5(g)), of all Patents, registrations of
Copyrights and registrations of Mask Works and applications for any of the
foregoing used in connection with the Business, which are Licensed by an
Affiliate of Seller to Seller or owned by Seller and not set forth on Schedule
3.5(a) (the "Samsung Licensed IP"), specifying as to each item, as applicable,
(i) the jurisdiction in which the item is issued or registered, including the
respective issuance or registration number and (ii) the filing date and, in the
case of issued patents, the expiration date.
(c) Schedule 3.5(c) contains a complete and correct list as of the date
hereof (subject to Section 3.5(h)), of all Licenses to Third-Party Licensed IP.
(d) Except as otherwise disclosed on Schedule 3.5(d) hereto, (i) Seller
is the owner of all right, title and interest in, and has the right to bring
actions for the infringement of all Assigned Technology free and clear of all
Liens, and (ii) to Seller's knowledge, no notice of actual, potential or alleged
infringement has been received by it as of the date hereof, nor to Seller's
knowledge, do any actual, potential or alleged claims of infringement of the
Intellectual Property rights of any third parties exist based upon the current
or past use by the Business of the Assigned Technology, Samsung Licensed IP or
the Third-Party Licensed IP. Seller has not made any current claim that a
third-party has violated or infringed any of the Assigned Technology, or with
respect to the operations of the Business, the Samsung Licensed IP or the
Third-Party Licensed IP.
(e) Except for commercial, off-the-shelf software which is used by
Seller pursuant to company wide license agreements and company wide support
Intellectual Property (which shall be provided to Buyer in the manner set forth
in the Intellectual Property Assignment and License Agreement), and except as
set forth in Schedule 3.5(e), there is no other Intellectual Property which
either is owned by Seller or an Affiliate of Seller and used by the Business, or
which is licensed to Seller in connection with the Business other than Assigned
Technology, Samsung Licensed IP and Third-Party Licensed IP, provided that Buyer
acknowledges the possibility that certain Intellectual Property may have been
omitted from Schedules 3.5(a)-(c), which omissions will be remedied in
accordance with Sections 3.5(f)-(h).
(f) To the extent that there is any Intellectual Property owned by
Seller which prior to the Closing Date was used primarily by the Business which
was omitted from the Intellectual Property assigned to Buyer pursuant to the
Intellectual Property Assignment and License Agreement, and Seller becomes aware
of that omission within two years from the Closing Date, or Buyer brings that
Intellectual Property to the attention of Seller within two years from the
Closing Date, Seller will assign such Intellectual Property to Buyer.
(g) To the extent that prior to the Closing Date there was any
Intellectual Property (other than Trademarks not included in the Assigned
Technology) owned by Seller which prior to the Closing Date was used in
connection with the Business which was omitted from the Intellectual Property
Assignment and License Agreement, and Seller becomes aware of that omission
within two years from the Closing Date, or Buyer brings such Intellectual
Property to
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the attention of Seller within two years from the Closing Date, Seller will add
or use its Best Efforts to cause its Affiliates to add, as the case may be, such
Intellectual Property to the Samsung Licensed IP and license it to Buyer in
accordance with the terms of the License identified in Section 5.14 that then
apply.
(h) To the extent that prior to Closing there is any license under
Third-Party Licensed IP which was omitted from Schedule 3.5(c) and Seller
becomes aware of that omission within two years from the Closing Date, or Buyer
brings such license to the attention of Seller within two years from the Closing
Date, Seller shall, subject to the consent of the licensor (if required),
transfer its rights under such license to Buyer.
Section 3.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed herein or
in the Schedules hereto, the Business has been conducted in all material
respects only in the ordinary course and since June 30, 1998, there has been:
(a) no change (or series of changes) in the business, financial
condition or results of operations of the Business, other than changes arising
in the ordinary course of business, which changes, individually or in the
aggregate, have had or reasonably would be expected to have an Adverse Effect,
except for any change resulting from general economic, market or industry
conditions;
(b) no physical damage, destruction or loss that would reasonably be
expected to have an Adverse Effect on the Business;
(c) no material strike, walkout, labor trouble or any other similar
event with respect to the Business;
(d) with respect to Transferring Employees, no increase in the salaries
or other compensation or benefits payable or to become payable to such employees
and no advance (excluding advances for ordinary business expenses) or loan to,
any officer or employee of the Business except in the ordinary course of
business and consistent with past practice;
(e) no surrender by the Business of any material right and no
cancellation or waiver of any debts or claims of substantial value except in the
ordinary course of business;
(f) no sale, transfer or other disposition of any Conveyed Assets,
except in the ordinary course of business;
(g) no change of which Seller has been notified in its relations with
any customers accounting for five percent or more of the annual sales of the
Business;
(h) no Adverse Change with respect to the Business of which Seller has
been notified in its relations with Employees or with any sole source supplier;
and
(i) no material change in the accounting practices of Seller with
respect to the Business.
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Section 3.7 LITIGATION; ORDERS. Except as disclosed in Schedule 3.7
hereto, there are no Actions pending, or to Seller's knowledge, threatened
against it that would, individually or in the aggregate, reasonably be expected
to have an Adverse Effect on the Business. Except as disclosed in Schedule 3.7
hereto, as of the date hereof, there are no Orders against Seller or the
Conveyed Assets that would, individually or in the aggregate, reasonably be
expected to have an Adverse Effect on the Business. Except as disclosed in
Schedule 3.7 hereto, to Seller's knowledge, there are no events or conditions
which would reasonably be expected to result in an Action against it that would,
individually or in the aggregate, reasonably be expected to have an Adverse
Effect on the Business.
Section 3.8 LICENSES, APPROVALS, OTHER AUTHORIZATIONS, CONSENTS,
REPORTS, ETC. Except as disclosed on Schedule 3.8 hereto and except as provided
herein, Seller has (or will have prior to the Closing Date) and upon
consummation of the transactions contemplated hereby, Buyer will have, all
Licenses relating to the Business (except as relates to Licenses under
Environmental Laws) that are required to permit Buyer to carry on the Business
as it is presently conducted, except where the failure to have such Licenses
would not, individually or in the aggregate, reasonably be expected to have an
Adverse Effect on the Business. All such Licenses are in full force and effect,
and Seller is in compliance with the terms of such Licenses, except where the
failure of such Licenses to be in full force and effect, or of the Seller to be
in compliance with such Licenses would not, individually or in the aggregate,
reasonably be expected to have an Adverse Effect on the Business, provided that
all representations and warranties with respect to Intellectual Property
Licenses are set forth in Section 3.5.
Section 3.9 LABOR MATTERS. To the knowledge of Seller, as of the date
hereof, the relations of Seller with the Transferring Employees are proper for
the conduct of the Business in the ordinary course. Schedule 3.9(i) hereto sets
forth, as of the date hereof, a list of all agreements with labor unions or
associations representing employees of Seller. No material work stoppage against
Seller is pending or, to Seller's knowledge, threatened. Seller is not involved
in or, to Seller's knowledge, threatened with, any labor dispute, arbitration,
lawsuit or administrative proceeding relating to labor matters involving the
Transferring Employees (excluding routine workers' compensation claims) that
would, individually or in the aggregate, reasonably be expected to have an
Adverse Effect on the Business. Schedule 3.9(ii) hereto sets forth all
Employees.
Section 3.10 COMPLIANCE WITH LAWS. Except as set forth on Schedule
3.10(i) hereto, the conduct of the Business by Seller complies with all Laws and
Orders applicable thereto, except for violations or failures so to comply, if
any, that would not reasonably be expected to have an Adverse Effect on the
Business. This Section 3.10 does not relate to employee benefits matters (for
which Section 3.11 is applicable), Tax matters (for which Section 3.16 is
applicable) or environmental matters (for which Section 3.15 is applicable).
Schedule 3.10(ii) hereto and the Licenses listed on other Schedules hereto list
all material Licenses issued by any Governmental Authority.
Section 3.11 EMPLOYEE BENEFITS.
(a) Set forth on Schedule 3.11 is a list of each Seller Benefit Plan in
effect as of the date of this Agreement.
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(b) As applicable with respect to each Seller Benefit Plan, Seller has
made or will make available to Buyer, copies of (i) each Seller Benefit Plan,
including all amendments thereto, and (ii) the current summary plan description
and each summary of material modifications thereto.
(c) Each Seller Benefit Plan has been maintained, operated and
administered in compliance in all material respects with its terms and the
applicable Law, except where such noncompliance would not have an Adverse Effect
on the Business.
Section 3.12 MATERIAL CONTRACTS. Except as set forth on Schedule 3.12
hereto, with respect to the Business, Seller is not a party to any (a)
employment agreement requiring payments of base compensation in excess of
$100,000 per year or consulting agreement requiring payments in excess of
$25,000 per year, (b) distributor or manufacturer's representative Contract
which is not terminable on four months' (or less) notice, (c) joint venture or
similar Contract or any Contract containing "non-compete" or similar
restrictions on the business activities of Seller except for foundry agreements,
buy-sell agreements and customer agreements entered into in the ordinary course
of business, (d) Contract (other than Samsung Licensed IP and Third-Party
Licensed IP) that is material to the Business that terminates or is terminable
or that requires the consent, authorization, approval or waiver thereof by the
other party thereto upon consummation of the transactions contemplated by this
Agreement, (e) note, mortgage, indenture, other obligation, agreement or other
instrument for or relating to any lending or borrowing relating to any Conveyed
Asset, (f) Contract for the purchase by Seller of goods and/or services
involving an estimated total future payment or payments in excess of $100,000,
(g) Contract for the sale by Seller of goods and/or services involving total
future payments in excess of $100,000 (all of which Contracts represent more
than ninety percent (90%) of the backlog of the Business as of the stated date)
or (h) other Contract entered into other than in the ordinary course of
business, involving a total future payment in excess of $100,000 and, with
respect to all such Contracts, except as set forth on Schedule 3.12 hereto, each
is in full force and effect and Seller is not, and to Seller's knowledge, no
other party to any such Contract is in breach thereof or default thereunder, and
there does not exist under any provision thereof, any event that, with the
giving of notice or the lapse of time or both, would constitute such a breach or
default, except for breaches, defaults and events as to which requisite waivers
or consents have been or are obtained or which failures to be in full force and
effect, and breaches, defaults and events which would not, individually or in
the aggregate, reasonably be expected to have an Adverse Effect on the Business.
Except as set forth on Schedule 3.12 hereof, Seller is not obligated under any
Contract in connection with the Business to any Affiliate of Seller.
Section 3.13 BROKERS, FINDERS, ETC. Seller has not employed, and is not
subject to any valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated hereby who might
be entitled to a fee or commission in connection therewith.
Section 3.14 NO IMPLIED REPRESENTATION. Notwithstanding anything
contained in this Article III or any other provision of this Agreement, it is
the explicit intent of each party hereto that Seller is making no representation
or warranty whatsoever, express or implied, beyond those expressly given in this
Agreement, including any implied warranty or representation as to
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condition, merchantability, or suitability as to any of the Conveyed Assets and
it is understood that Buyer takes the Business and the Conveyed Assets without
recourse to Seller as to claims based on any inadequacy of condition, impaired
merchantability or lack of suitability. It is understood that any cost
estimates, projections or other predictions contained or referred to in the
offering materials that have been provided to Buyer are not and shall not be
deemed to be representations or warranties of Seller.
Section 3.15 ENVIRONMENTAL MATTERS. Except as set forth in Schedule
3.15:
(a) the Bucheon Facility (i) is in compliance with all applicable
Environmental Laws and/or Environmental Permits, and (ii) the Bucheon Facility
is not undertaking, nor has Seller received notice that it is subject to,
Remediation or enforcement action under any applicable Environmental Laws and/or
Environmental Permits, except for such non-compliance, Remediation or
enforcement actions that would not have an Adverse Effect on the Business;
(b) the Business has obtained all Environmental Permits required under
all applicable Environmental Laws in relation to the Bucheon Facility, except
for such failures as would not have an Adverse Effect on the Business; and
(c) no claims have been made or threatened that would reasonably be
expected to result in Environmental Liability arising from, or as a result of,
(i) on-site exposures to hazardous substances at the Bucheon Facility; (ii)
Releases of Hazardous Substances at or from the Bucheon Facility; (iii) off-site
treatment, storage or disposal of Hazardous Substances from the Bucheon
Facility; (iv) the handling of products by employees of others or by the Release
of products into the environment as a result of treatment, storage or disposal
from the Bucheon Facility; or (v) noncompliance with any Environmental Law at
the Bucheon Facility.
Section 3.16 TAX MATTERS.
(a) Seller has (i) timely filed all Tax Returns required to be filed by
it, (ii) paid all Taxes shown to have become due pursuant to such Tax Returns
and (iii) paid all other Taxes for which a notice of assessment or demand for
payment has been received. All Tax Returns are true, correct and complete; have
been prepared in accordance with all applicable laws and requirements; and
accurately reflect the taxable income (or other measure of tax) of Seller. The
accruals for Taxes, other than Income Taxes, contained in the Closing Balance
Sheet will be adequate to cover all liabilities for Taxes, other than Income
Taxes, of Seller for all periods ending on or before the Closing Date in
accordance with GAAP, and nothing has occurred subsequent to such dates to make
any of such accruals inadequate. All Taxes, other than Income Taxes, of Seller
for periods after June 30, 1998 through the Closing Date have been paid or are
adequately reserved against on the books of Seller. Seller has timely filed all
information returns or reports that are required to be filed and has accurately
reported all information required to be included on such returns or reports.
(b) Except as disclosed on Schedule 3.16 hereto, there are no proposed
assessments of Taxes against Seller, no proposed adjustments to any Tax Return
pending against Seller and no proposed adjustments to the manner in which any
Tax of Seller is determined. Except as disclosed on Schedule 3.16 hereto, each
Tax Return of Seller has been audited by the relevant
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authorities (and all deficiencies or proposed deficiencies resulting from such
audits have been paid or are adequately provided for in the Financial
Statements), or the statute of limitations with respect to each Tax Return or
Tax payment has expired, and no Tax Return is under examination by any taxing
authority. No claim has been made by a taxing authority in a jurisdiction where
Seller does not pay Taxes or file Tax Returns that Seller is or may be subject
to taxation by that jurisdiction.
(c) Except as disclosed on Schedule 3.16 hereto, Seller has never (i)
executed a waiver or consent extending any statute of limitation for any Tax
liability that remains outstanding, (ii) joined in or been required to join in
filing a consolidated or combined federal, state or local income Tax Return,
(iii) been the subject of a Tax ruling that will have continuing adverse effect
following the Closing, (iv) been the subject of a closing agreement with any
taxing authority that will have continuing adverse effect following the Closing,
or (v) granted a power of attorney with respect to any Tax matter that has
continuing adverse effect.
Section 3.17 LICENSES, APPROVALS, OTHER AUTHORIZATIONS, CONSENTS,
REPORTS, ETC. Other than the HSR Act and the FTA, no filing with, notice to or
authorization, consent or approval of, any Governmental Authority is required to
be made, filed, given or obtained by Seller or any of its Affiliates, in
connection with the consummation of the transactions contemplated hereby except
for (i) those that become applicable solely as a result of the specific
regulatory status of Buyer, or (ii) the failure to make, file, give or obtain
which would not, individually or in the aggregate, reasonably be expected to
have an Adverse Effect on the Business or Seller and its subsidiaries, taken as
a whole.
Section 3.18 SCHEDULES.
(a) Any matter described in any Schedule hereto shall be deemed to be
referred to on all other Schedules hereto to which such matter logically relates
if such relationship can reasonably be inferred from the description of the
matter provided in the first such Schedule.
(b) The inclusion of any item on any Schedule to this Agreement shall
not be construed as an indication that such item is material in any respect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
Section 4.1 INCORPORATION; AUTHORIZATION; ETC. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. Buyer has full corporate power to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance of Buyer's obligations hereunder and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Buyer and no other corporate proceedings or actions on the
part of Buyer, its Board of Directors or stockholders are necessary therefor.
The execution, delivery and performance of this Agreement will not (i) violate
any provision of the charter or bylaws or similar
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organizational instrument of Buyer or any of its Affiliates, (ii) violate any
provision of, or be an event that is (or with the passage of time will result
in) a violation of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or result in the imposition of any Lien upon or the creation
of a security interest in any of Buyer's or any of its Affiliates' assets or
properties pursuant to, any Contract or Order to which Buyer or any of its
Affiliates is a party or by which Buyer or any of its Affiliates is bound, or
(iii) violate or conflict with any other material restriction of any kind or
character to which Buyer or any of its Affiliates is subject, that, in the case
of clauses (ii) and (iii), would, individually or in the aggregate, reasonably
be expected to have an Adverse Effect on Buyer or Buyer and its subsidiaries,
taken as a whole. This Agreement has been duly executed and delivered by Buyer,
and, assuming the due execution hereof by Seller, this Agreement constitutes the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms.
Section 4.2 BROKERS, FINDERS, ETC. Except for the services of CS First
Boston (which shall be paid for by Buyer), Buyer has not employed, and is not
subject to the valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated by this Agreement
who might be entitled to a fee or commission from Seller in connection
therewith.
Section 4.3 LICENSES, APPROVALS, OTHER AUTHORIZATIONS, CONSENTS,
REPORTS, ETC. Other than the HSR Act and the FTA, no filing with, notice to or
authorization, consent or approval of, any Governmental Authority is required to
be made, filed, given or obtained by Buyer or any of its Affiliates, in
connection with the consummation of the transactions contemplated hereby except
for (i) those that become applicable solely as a result of the specific
regulatory status of Seller, or (ii) the failure to make, file, give or obtain
which would not, individually or in the aggregate, reasonably be expected to
have an Adverse Effect on the Business or Buyer and its subsidiaries, taken as a
whole.
Section 4.4 ACQUISITION OF THE CONVEYED ASSETS AND OPERATION OF
BUSINESS FOR INVESTMENT. Buyer has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
its purchase of the Conveyed Assets and operation of the Business. Buyer
confirms that Seller has made available to Buyer the opportunity to ask
questions of the officers of Seller and to acquire additional information about
the business and financial condition of Seller and the Business.
ARTICLE V
COVENANTS OF SELLER AND BUYER
Section 5.1 INVESTIGATION OF BUSINESS; ACCESS TO PROPERTIES, RECORDS
AND EMPLOYEES.
(a) Seller shall afford to representatives of Buyer reasonable access
to the offices, plants, properties, personnel, books and records of Seller
during normal business hours, in order that Buyer may have full opportunity to
make such investigations (including, without limitation, environmental
assessments or studies) as it desires of the affairs of Seller; provided,
however, that such investigation shall not unreasonably disrupt the personnel
and operations of the Business. If, in the course of any investigation pursuant
to this Section 5.1 between the execution
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of this Agreement and the Closing Date, Buyer discovers any breach of any
representation or warranty contained in this Agreement that would constitute
grounds upon which Buyer could refuse to close the transactions contemplated
hereby or any circumstance or condition that, to the knowledge of the chief
financial officer or general counsel of Buyer, would upon Closing constitute
such a breach, Buyer covenants that it will promptly so inform Seller and may
not rely on any such breach not disclosed as grounds for refusing to close the
transactions contemplated hereby, provided that no failure by Buyer to disclose
any such breach to Seller shall be used by Seller as a defense to Seller's duty
to indemnify for any such breach under Section 11.2 hereof. Seller acknowledges
that its representations and warranties in this Agreement shall not otherwise be
affected or mitigated by any investigation conducted by Buyer or its
representatives prior to Closing, or by any Knowledge of Buyer.
(b) Any information provided to Buyer or its representatives pursuant
to this Agreement shall be held by Buyer and its representatives in accordance
with, and shall be subject to the terms of, the Confidentiality Agreement dated
September 18, 1998 (the "Confidentiality Agreement") by and between Seller and
Buyer, which is hereby incorporated in this Agreement as though fully set forth
herein. From the date hereof to the Termination Date, Seller shall not, and
shall not permit any of its Affiliates or any Person acting on behalf of Seller
or any Affiliate to, directly or indirectly, initiate, solicit, negotiate,
encourage, accept or otherwise pursue any offer or inquiry from any other Person
relating to the sale or acquisition of the Business.
(c) Buyer agrees to (i) hold all of the books and records of the
Business existing on the Closing Date and not to destroy or dispose of any
thereof for a period of five (5) years from the Closing Date or such longer time
as may be required by law, and thereafter, if it desires to destroy or dispose
of such books and records, to offer first in writing at least sixty (60) days
prior to such destruction or disposition to surrender them to Seller and (ii)
following the Closing Date to afford Seller, its accountants and counsel, during
normal business hours, upon reasonable request, reasonable access to such books,
records and other data and to the employees of the Buyer to the extent that such
access may be requested for any legitimate purpose, including without
limitation, responding to Governmental Authorities, defending or prosecuting
litigation and preparing Income Tax Returns and other tax filings, at no cost to
Seller (other than for reasonable out-of-pocket expenses); provided, however,
that nothing herein shall limit any of Seller's rights of discovery. Buyer shall
have the same rights, and Seller the same obligations, as are set forth above in
this Section 5.1(c), with respect to any books and records of Seller pertaining
to the Business that are retained by Seller, with the exception of Returns
relating to Taxes that are not the responsibility of Buyer.
Section 5.2 BEST EFFORTS; OBTAINING CONSENTS.
(a) Subject to the terms and conditions herein provided, each of Seller
and Buyer agrees to use its Best Efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable, the
transactions contemplated by this Agreement and to cooperate with each of the
others in connection with the foregoing, including using its Best Efforts (i) to
obtain all necessary waivers, consents and approvals from other parties to
material Contracts, (ii) subject to subsection (b) below, to obtain all
consents, approvals and authorizations that are required to be obtained under
any Law, (iii) subject to subsection (b) below, to lift or rescind any Order
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adversely affecting the ability of the parties hereto to consummate the
transactions contemplated hereunder, (iv) to effect all necessary registrations
and filings including filings under the HSR Act and the FTA and submissions of
information requested by Governmental Authorities, and (v) to fulfill all
conditions to this Agreement (it being understood that such efforts shall not
include any requirement of Buyer or Seller to expend material sums of money or
grant any material financial or other accommodation). Seller and Buyer further
covenant and agree, with respect to a threatened or pending Order or Law that
would adversely affect the ability of the parties hereto to consummate the
transactions contemplated hereunder, to use their respective Best Efforts to
prevent the entry, enactment or promulgation thereof, as the case may be (it
being understood that such efforts shall not include any requirement of Buyer or
Seller to expend material sums of money or grant any material financial or other
accommodation).
(b) (i) Seller and Buyer shall (A) make or cause to be made the filings
required of such party or any of its subsidiaries or Affiliates under the HSR
Act and the FTA with respect to the transactions contemplated hereby as promptly
as practicable and in any event within five (5) days after the date of this
Agreement, (B) comply at the earliest practicable date with any request under
the HSR Act and the FTA for additional information, documents, or other
materials received by such party or any of its subsidiaries from the Federal
Trade Commission or the Department of Justice or any other Governmental
Authority in respect of such filings or such transactions, and (c) cooperate
with the other party in connection with any such filing (including, with respect
to the party making a filing, providing copies of all such documents to the
non-filing party and its advisors prior to filing and, if requested, to accept
all reasonable changes suggested in connection therewith) and in connection with
resolving any investigation or other inquiry of any such agency or other
Governmental Authority under any Antitrust Laws (as defined in Section
5.2(b)(ii) hereof) with respect to any such filing or any such transaction. Each
party shall use its Best Efforts to furnish to each other all information
required for any application or other filing to be made pursuant to any
applicable Law in connection with the transactions contemplated hereunder. Each
party shall promptly inform the other party of any communication with, and any
proposed understanding, undertaking, or agreement with, any Governmental
Authority regarding any such filings or any such transaction. Neither party
shall independently participate in any formal meeting with any Governmental
Authority in respect of any such filings, investigation or other inquiry without
giving the other party prior notice of the meeting and, to the extent permitted
by such Governmental Authority, the opportunity to attend and/or participate.
The parties hereto will consult and cooperate with one another in connection
with any analyses, appearances, presentations, memoranda, briefs, arguments,
opinions and proposals made or submitted by or on behalf of any party hereto in
connection with proceedings under or relating to the HSR Act, the FTA or other
Antitrust Laws.
(ii) Each of Seller and Buyer shall use its Best Efforts to
resolve such objections, if any, as may be asserted by any Governmental
Authority with respect to the transactions contemplated by this Agreement under
the HSR Act, the FTA, the Sherman Act, as amended, the Clayton Act, as amended,
the Federal Trade Commission Act, as amended, and any other federal, state or
foreign statutes, rules, regulations, orders, decrees, administrative or
judicial doctrines or other laws that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade (collectively, "Antitrust Laws"). In connection therewith, if any
administrative or judicial action or proceeding is instituted (or threatened to
be instituted) challenging any transaction contemplated by this Agreement as
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violative of any Antitrust Law, each of Seller and Buyer shall cooperate and use
its Best Efforts vigorously to contest and resist any such action or proceeding,
including any legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent, that is in effect and
that prohibits, prevents, or restricts consummation of the transactions
contemplated hereunder, and vigorously to pursue all available avenues of
administrative and judicial appeal and all available legislative action, unless
by mutual agreement Seller and Buyer decide that litigation is not in their
respective best interest. Each of Seller and Buyer shall use its Best Efforts to
take such action as may be required to cause the expiration of the notice period
under the HSR Act, the FTA, or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this Agreement.
(c) [Reserved.]
(d) In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Section 5.2, the proper
officers and/or directors of Seller and Buyer or any of their Affiliates,
including, to the extent applicable, any Entity designated to hold the Conveyed
Assets, shall take all such necessary action.
Section 5.3 FURTHER ASSURANCES. Seller and Buyer agree that, from time
to time, whether before or after the Closing, each of them will execute and
deliver such further instruments of conveyance and transfer and take such other
action as may be reasonably required or desirable to carry out the purposes and
intent of this Agreement, including (i) allocating rights and obligations under
Contracts and other arrangements, if any, relating to business of Seller and its
Affiliates (other than the Business), on the one hand, and relating to the
Business on the other, (ii) transferring assets to the Buyer, and (iii) entering
into any service or other sharing agreements on a mutually acceptable
arm's-length basis that may be necessary to assure a smooth and orderly
transition. In case at any time after the Closing Date, any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall take all such
necessary or desirable action.
Section 5.4 CONDUCT OF BUSINESS. From the date hereof through the
Closing, except as disclosed on Schedule 5.4 hereto or otherwise provided for
in, or contemplated by, this Agreement, and, except as consented to or approved
by Buyer in writing (which consent shall not be unreasonably withheld or
delayed), Seller covenants and agrees that:
(a) Seller shall use reasonable efforts to operate the Business for the
benefit of Buyer in the ordinary and usual course in all material respects in
accordance with past practices;
(b) except in the ordinary course of business or as required by Law,
Contract or the terms of a Seller Benefit Plan existing on the date hereof,
Seller shall not hereafter, with respect to the Business, (i) increase the base
compensation of, or enter into any new bonus or incentive agreement or
arrangement with, any of the senior management employees employed by the Seller;
(ii) pay or agree to pay any pension, retirement allowance or other employee
benefit to any Transferring Employee, whether past or present not otherwise
required by Contract or under any Employee Benefit Plan in effect on the date
hereof; (iii) enter into any express new employment, severance, consulting or
other compensation agreement with any Transferring
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Employee; or (iv) commit itself to any pension, profit sharing, deferred
compensation, group insurance, severance pay, retirement or other employee
benefit plan, fund or similar arrangement in addition to those in effect on the
date hereof and intended exclusively for Transferring Employees, or amend or
commit itself to amend any of such plans or similar plans intended for the
benefit of Seller's employees generally if the effect thereof would exclusively
benefit Transferring Employees, funds or similar arrangements in existence on
the date hereof.
(c) Seller shall not, with respect to the Business, (i) cancel or
compromise, except in the ordinary course of business consistent with past
practice, any debts owed to it, (ii) waive or release any rights of material
value or (iii) close any plants or any other material facilities.
(d) Seller shall not, with respect to the Business, (i) sell, transfer,
distribute as a dividend in kind or otherwise dispose of any material asset
(other than inventory in the ordinary course of business consistent with past
practice), (ii) create or permit to exist any new material security interest,
lien or encumbrance on its assets, (iii) except in the ordinary course of
business, enter into any joint venture, partnership or other similar arrangement
or form any other new material arrangement for the conduct of its business, (iv)
except in the ordinary course of business, purchase any asset, (v) implement or
effect any change with respect to its billing or collection practices, or (vi)
make any capital expenditures (other than those required to be made pursuant to
clause (iv) of Section 5.5); provided, however, that any capital expenditures
approved by Buyer that are not required to be made pursuant to clause (iv) of
Section 5.5 shall increase the Purchase Price on a dollar-for-dollar basis.
(e) From the Transfer Date to the Closing, Seller shall operate the
Business for the sole benefit of Buyer.
Section 5.5 PRESERVATION OF BUSINESS. From the date hereof to the
Closing Date, subject to the terms and conditions of this Agreement, Seller
shall use its Best Efforts (i) to keep available to Buyer the services of the
Transferring Employees (ii) to retain the employees set forth on Schedule 5.5 in
the employment of Seller (iii) to preserve the goodwill of customers and others
having business relations with the Business and (iv) to make capital
expenditures with respect to the maintenance of the Conveyed Assets consistent
with past practices.
Section 5.6 PUBLIC ANNOUNCEMENTS. From the date hereof to the Closing
Date, Seller and Buyer will consult with each other before issuing, or
permitting any agent or Affiliate to issue, any press releases or otherwise
making or permitting any agent or Affiliate to make, any public statements with
respect to this Agreement and the transactions contemplated hereby, and, except
as may be required by Law or any listing agreement with any securities exchange,
will not issue any such press release or make any such public statement, unless
the text of such statement shall have been agreed upon by the parties.
Section 5.7 [Reserved.]
Section 5.8 PERFORMANCE OF OBLIGATIONS TO SELLER. Buyer agrees from and
after the Closing Date to perform and fulfill (or cause to be performed and
fulfilled) all Contracts, existing as of the Closing Date, between the Business
and any Affiliate of Seller.
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Section 5.9 NON-INFRINGEMENT. Seller agrees that neither itself nor its
Affiliates will, in connection with the conduct of the Business, assert against
Buyer, or its Affiliates, any claims for infringement of (i) any Patent,
Copyright, or Mask Work which on the Closing Date it owns or under which it has
a right to grant a License without obligation or accounting to others, or (ii)
any of the foregoing which may later issue on an application owned by Seller and
pending on the Closing Date.
Section 5.10 BUYER'S WARRANTY OBLIGATION.
(a) To the extent not retained by Seller under clause (iii) of the
definition of Retained Liabilities, Buyer covenants and agrees that it will
honor fully and perform diligently all of the product warranty, guaranty and
product return obligations, express or implied, of the Business which arise from
or are related to products manufactured or services provided prior to the
Closing Date by the Business in the ordinary course of business, including, with
respect to products manufactured for or services provided to any Affiliate of
Seller, provided that Buyer shall not have responsibility or liability for any
such obligations constituting Retained Liabilities as set forth in paragraph
(iii) of the definition of Retained Liabilities.
(b) From and after the Closing Date, Buyer shall indemnify and hold
harmless Seller from and against any and all Covered Liabilities (as defined in
Section 11.2 hereof), suffered, incurred by or asserted, directly or indirectly,
against Seller by reason or arising out of the covenants set forth in Section
5.10(a) hereof. Claims for breaches of covenant of Buyer in Section 5.10(a)
hereof may be asserted until 60 days after the running of the applicable statute
of limitations.
Section 5.11 PATENT INDEMNIFICATION.
(a) Subject to the limitations set forth in this Section 5.11, for the
three (3) year period beginning on the Closing Date, Seller shall indemnify,
save and hold harmless Buyer, its Affiliates and for each such Entity, their
respective officers, directors, employees, agents, distributors and users of
Business Products from and against money damages (including royalties) and/or
costs awarded arising out of any claims by any third-party that the design,
development, making, having made, use, offer for sale, import, package or sale
of Business Products by the Business infringes any patent issued prior to the
Closing Date in any country in which the allegedly infringing Business Product
had been made, used or sold prior to Closing; provided, however, that such
indemnification shall not apply to a Business Product if the infringement of a
third-party's patent would have been avoided but for a post-Closing change in
manufacturing, design or packaging of a Business Product, or but for a change in
the combination of products with which a Business Product is sold or offered for
sale.
(b) Upon its receipt of a claim giving rise to a claim for indemnity
under this Section 5.11, including receipt by it of any notification,
communication, demand, assertion, claim, action, judicial proceeding,
administrative proceeding, or other proceeding by any third-party that Buyer
infringes or has misappropriated such a third-party's patent, Buyer will give
prompt written notice thereof to Seller. Buyer's failure to notify Seller
promptly of a claim will relieve Seller of its obligations under this Section
5.11 only if the failure has an Adverse Effect on Seller's ability to defend or
settle that claim, and such failure shall only affect Seller's
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obligations with respect to that claim. Seller shall promptly address all claims
received from Buyer. Seller shall act in good faith in evaluating a settlement
of a claim and shall consider the following factors in the evaluation: (i) the
validity of the claim, (ii) the monetary limitations of the indemnity under this
Section 5.11, (iii) the effect of the claim being upheld in litigation upon the
Business, and (iv) the mutual desire of the parties to minimize the expense of
the indemnity.
(c) The indemnity set forth in Section 5.11 shall apply for the
enforceable life of the asserted patent with respect to any claims filed prior
to the expiration of the three year period set forth in Section 5.11(a).
(d) With respect to any claim which Seller is called upon to indemnify
Buyer under the terms of this Section 5.11, Seller shall have the exclusive
control of the defense of such suit and all negotiations relative to the
settlement thereof. Buyer shall provide all reasonable information and
assistance, at Seller's sole expense, as Seller may request, including, if
commercially reasonable, redesigning the Buyer's products to make them
non-infringing. The commercial reasonableness of a redesign of a product
includes, without limitation, the retention of all performance features that
materially affect the marketability of the product, the lack of any material
effect on Buyer's ability to obtain orders and to obtain and retain customers
for the product, and the avoidance of any material increased manufacturing
costs. Seller shall be permitted to settle such claims, upon reasonable prior
notice to, and after consultation with, Buyer, at its sole expense, provided
Buyer shall not have any obligation for future expense or payment and provided
that the settlement agreement shall not result in any requirement that Buyer
cease, alter (except for a redesign provided for by this Section 5.11(d)) or
curtail the manufacturing, importation, marketing or sale of any product. Buyer
shall have the right, but not the obligation, to participate in such legal
proceedings with counsel of its own selection and its own expense. Buyer agrees
that Seller shall be authorized in the settlement of such claims to grant
licenses under Patents that are Assigned Technology or Samsung Licensed IP,
provided that Buyer receives from the licensee of such patents a reciprocal
patent license of comparable weight and scope.
(e) Seller's liability under this Section 5.11 and Section 5.23
(including all third-party costs and out-of-pocket expenses incurred by it
exclusive, however, of any internal Seller man-hour costs (salaries plus
applicable mark-ups for fringes and overhead) for the time its employees spent
on the matter) shall in no event exceed forty million dollars ($40,000,000.00);
provided, however, that if this liability limit will be exceeded by virtue of
any proposed settlement, Seller shall not make such a settlement without the
prior written consent of Buyer provided that Buyer shall be responsible for and
shall assume all costs in excess of said limit of liability and provided that
Buyer shall not unreasonably withhold its consent to any proposed settlement;
provided further, that no Retained Liability shall be included in the foregoing
limit.
(f) The indemnity provided in this Section 5.11 shall not apply if (i)
the claimed infringement is the result of the Buyer's breach of any obligation
under any License or (ii) the damages and/or costs being claimed have previously
been recovered under Section 11.2.
Section 5.12 ABSENCE OF DEBT. Seller covenants to Buyer that, except
for Retained Liabilities, the Business has no outstanding debt obligations
(including without limitation letters
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of credit or surety obligations) as of the date hereof and will have no such
debt obligations as of the Closing Date.
Section 5.13 NONCOMPETITION AND NONSOLICITATION.
(a) Seller agrees, on behalf of Seller and the Affiliates of Seller
(the "Samsung Group"), that for a period of five (5) years after the date hereof
(the "Restricted Period"), no member of the Samsung Group will engage directly
or indirectly in competition with the Business, whether individually or as a
consultant, partner, owner or stockholder of an Entity. Notwithstanding the
foregoing, nothing herein shall prohibit any member of the Samsung Group from
(i) owning, directly or indirectly, less than ten percent (10%) of any class of
securities listed on a national securities exchange or traded publicly in the
over-the-counter market, (ii) directly or indirectly acquiring a business which
engages in the Business if such business is twenty percent (20%) or less
(measured by net revenues) of a larger business acquired by a member of the
Samsung Group, provided that Seller shall not make any Samsung Licensed IP
available to such business, (iii) acquiring a business which engages in the
Business if such business is more than twenty percent (20%) but less than fifty
percent (50%) (measured by net revenues) of a larger business acquired by a
member of the Samsung Group, provided that (A) such member of the Samsung Group
places such competitive business for sale promptly after its acquisition and
uses commercially reasonable efforts to complete such sale within the Restricted
Period and (B) Seller shall not make any Samsung Licensed IP available to such
business, and (iv) continuing to produce and sell those products now being
produced and sold by members of the Samsung Group (including within the
foregoing all products that were under development as of the date hereof),
except those silicon semiconductor devices that have substantially similar
specifications to those manufactured by the Business. Notwithstanding, anything
to the contrary, nothing contained herein shall prohibit or limit the ability of
Seller or its Affiliates to perform their respective obligations under the
certain foundry services agreement, dated as of June 21, 1995, with IXYS
Corporation, as amended on March 28, 1996 and March 13, 1998.
(b) For a period of one year from and after the Closing Date, neither
party hereto will, and the parties hereto will cause their respective Affiliates
not to, directly or indirectly, solicit or induce any person or entity who is a
director, officer, employee or agent of the other party or any of its Affiliates
to terminate his, her or its relationship with, or employment by, such entity.
In the event an employee of either party hereto seeks employment with the other
party hereto without any solicitation of such other party, then the party with
whom such employee is seeking employment shall consult with the other party
prior to making any hiring decision.
Section 5.14 INTELLECTUAL PROPERTY ASSIGNMENT AND LICENSE AGREEMENT;
DELIVERY OF FILES. On the Closing Date, Buyer and Seller will enter into an
Intellectual Property Assignment and License Agreement in the form attached
hereto as Exhibit C and Seller shall deliver to Buyer the file histories for the
Intellectual Property identified in Schedule 3.5(a) which is being transferred
to Buyer pursuant to Intellectual Property Assignment and License Agreement
identified in this Section 5.14.
Section 5.15 TRANSITIONAL SERVICES AGREEMENT. At the Closing, Buyer and
Seller shall enter into, execute and deliver a transitional services agreement
substantially to the effect set
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forth in Exhibit D whereby Seller agrees to provide administrative services and
manufacturing services to Buyer (the "Transitional Services Agreement").
Section 5.16 ASSEMBLY AND TEST SERVICES AGREEMENT. At the Closing,
Buyer and Seller shall enter into, execute and deliver a test services agreement
on substantially the terms set forth in Exhibit E whereby Seller agrees to
provide assembly and test services for Buyer (the "Test Services Agreement").
Section 5.17 TRADEMARK LICENSE AGREEMENT. (a) At the Closing, Buyer and
Seller shall enter into, execute and deliver a trademark license agreement on
substantially the terms set forth in Exhibit F whereby Seller grants to Buyer a
non-exclusive short-term transition license to continue use of certain Inventory
and packaging bearing trademark, logo and product code of Seller (the "Trademark
License Agreement").
Section 5.18 FOUNDRY SALE AGREEMENT. At the Closing, Buyer and Seller
shall enter into, execute and deliver a foundry service agreement on
substantially the terms set forth in Exhibit G whereby Buyer agrees to provide a
wafer foundry service for Seller for up to three (3) years from the Closing (the
"Foundry Sale Agreement").
Section 5.19 PRODUCT SUPPLY AGREEMENT. At the Closing, Buyer and Seller
shall enter into, execute and deliver a product supply agreement on
substantially the terms set forth in Exhibit H whereby Buyer agrees to provide
and Seller agrees to purchase, over a three year period, certain products as set
forth in such agreement (the "Product Supply Agreement").
Section 5.20 EMPLOYMENT AGREEMENT. At the Closing, Buyer shall enter
into, execute and deliver an employment agreement with Mr. D.J. Kim in form and
substance reasonably satisfactory to the parties thereto (the "Employment
Agreement").
Section 5.21 EPI SUPPLY AGREEMENT. At the Closing, Buyer and Seller
shall enter into, execute and deliver an Epi wafer supply agreement on
substantially the terms set forth in Exhibit I (the "Epi Supply Agreement").
Section 5.22 MASK WORKS AGREEMENT. At the Closing, Buyer and Seller
shall enter into, execute and deliver a Mask Works Supply Agreement on
substantially the terms set forth in Exhibit J.
Section 5.23 INTELLECTUAL PROPERTY CLAIMS. In the event that any claim
is made against Buyer with respect to any design, development, making, having
made, using, offering for sale, importing, exporting, or selling of Business
Products as a result of the fact that Seller failed to identify in Schedule
3.5(c) any license for Third-Party Licensed IP and that, as a consequence
thereof, failed to request the required consents to transfer such license rights
to Buyer, then in such case Seller shall, subject to the limit of liability set
forth in Section 5.11(e), indemnify, save and hold harmless Buyer from and
against any money damages (including royalties) and/or costs awarded arising out
of any such claim to the extent that such amounts are in excess of the license
fees and royalties which would have been payable had the license been identified
and transferred. The limit of liability under Section 5.11(e) is an aggregate
limit for claims arising under both Section 5.11 and this Section 5.23. Seller
shall have no liability if it requests and obtains the required consents with
retroactive application and Seller shall have no liability,
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resulting from a licensor's refusal to grant the consents when requested to do
so. The indemnity provided in this Section 5.23 shall not apply if the damages
and/or costs being claimed have previously been recovered under Section 11.2
hereof.
Section 5.24 FINANCING. Buyer shall use its Best Efforts to obtain
adequate financing to fund the Purchase Price on or prior to March 15, 1999.
Section 5.25 SUBCONTRACTORS. At the Closing, Seller shall provide Buyer
with assurances, reasonably satisfactory to Buyer, that Buyer will have
commitments from current subcontractors to provide adequate assembly and testing
services for a period of one year following the Closing on terms consistent with
past practice with respect to volume, capacity and price protection.
Section 5.26 INCOME CALCULATION. On or prior to the Closing, Seller
shall calculate the net income before Income Taxes (as calculated in accordance
with GAAP) generated by the Business from the Transfer Date to February 28,
1999, which calculation shall be reasonably satisfactory to Buyer. The Purchase
Price shall be adjusted on a dollar-for-dollar basis to reflect net income
(loss) before Income Taxes (as calculated in accordance with GAAP) for such
period. On or prior to the date that is thirty (30) days following the Closing
Date, Seller shall calculate the net income before Income Taxes (as calculated
in accordance with GAAP) generated by the Business from March 1, 1999 to the
Closing Date, which calculation shall be reasonably satisfactory to Buyer.
Within five (5) days after Buyer's acceptance of such calculation, either Seller
shall pay Buyer an amount equal to any net income before Income Taxes (as
calculated in accordance with GAAP) for such period or Buyer shall accept any
net (loss) before Income Taxes (as calculated in accordance with GAAP) for such
period. For purposes of the calculations required under this Section 5.26,
expenses of the Business shall not include, and net income of the Business shall
not be reduced by, any payments or accruals in respect of Retained Liabilities
and shall not be increased by any revenues related to Excluded Assets.
Section 5.27 . Buyer shall, on or prior to the Transfer Date, receive a
business registration from the appropriate authorities in Korea.
Section 5.28 SALE OF INVENTORY. With respect to any inventory that
would be included as Conveyed Assets pursuant to clause (c) of the definition of
Conveyed Assets but for Seller's sale of such inventory to subsidiaries of
Seller prior to the Closing Date ("Retained Inventory"), Seller shall not,
without the prior written consent of Buyer, sell, and Seller shall use its
reasonable efforts to cause such subsidiaries to refrain from selling, the
Retained Inventory, and (ii) Buyer shall have the right on behalf of Seller, and
shall use its reasonable efforts, to sell the Retained Inventory in due course.
Seller shall pay to Buyer a commission equal to 9% of gross sales on the
Retained Inventory.
ARTICLE VI
EMPLOYEES, EMPLOYEE BENEFITS
AND OTHER TRANSITIONAL MATTERS
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Section 6.1 EMPLOYEES; OFFER OF EMPLOYMENT; SEVERANCE. Buyer agrees to
offer employment to each Employee located in Korea, and to enter into an
Employee Transfer Agreement in form and substance reasonably satisfactory to the
parties as of 12:01 a.m. on the day immediately following the Closing Date in
the same or a comparable position and at a rate of pay at least equal to the
Employee's rate of pay in effect on the Closing Date and with the same or
comparable benefits and subject to the same or comparable terms, conditions and
work rules as are applicable to the respective Employee on the Closing Date or
as required by Law. For purposes of this Article VI, references to "pay" shall
include monthly pay plus any bonus or incentive pay. Schedule 6.1 shall set
forth the name of each Employee, and his or her current rate of pay, position
and date of hire. Buyer shall have no obligation whatsoever with regard to (i)
former employees of the Business who are retired, or who are not or shall have
ceased to be Employees as of the Closing Date, or (ii) Employees who do not
accept the offer of employment or continuation of employment given by Buyer in
accordance with this Section 6.1.
Section 6.2 ACCRUED ENTITLEMENTS. Except as set forth herein, Buyer
shall be responsible for all accrued entitlements, including vacation days,
severance and retirement obligations, for all Transferring Employees as of the
Closing Date consistent with Seller's policy in respect thereof to the extent
that the same are accrued as liabilities on the Closing Balance Sheet.
Section 6.3 MEDICAL AND WELFARE PLAN OBLIGATIONS. Prior to the Closing
Date, Buyer agrees to establish, amend or maintain through transition services
agreements, welfare, medical, dental and short-term and long-term disability
plans with comparable benefits as are applicable to the Transferring Employees
on the Closing Date. Commencing as of 12:01 a.m. on the day immediately
following the Closing Date, Buyer shall include the Transferring Employees in
such welfare plans and agrees to waive any waiting periods or limitations for
preexisting conditions under its new or amended medical, dental, life and
short-term and long-term disability plans and shall ensure that Employees are
given credit for any amounts paid toward deductibles, out-of-pocket limits or
other fees on or prior to the Closing Date. Claims by a Transferring Employee
for medical and dental services rendered as of 12:01 a.m. on the day immediately
following the Closing Date shall be the responsibility of the medical and dental
plans provided by Buyer to the Employees. Claims incurred for medical and dental
services for Transferring Employees rendered prior to and including the Closing
Date shall be the responsibility of the group medical and dental plans of Seller
which covered such Employees prior to and including the Closing Date.
Section 6.4 NO THIRD-PARTY BENEFICIARIES. Except as expressly provided
herein, nothing contained herein, expressed or implied, is intended to confer
upon any Employee any benefits under any benefit plans, programs, policies or
other arrangements, including, but not limited to, severance benefits or right
to employment or continued employment with Buyer or any Affiliate of Buyer for
any period by reason of this Agreement. In addition, the provisions of this
Agreement, in particular this Article VI, are for the sole benefit of the
parties to this Agreement and are not for the benefit of any third-party.
ARTICLE VII
TAX MATTERS
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Section 7.1 PREPARATION AND FILING OF TAX RETURNS. Seller shall prepare
and timely file or shall cause to be prepared and timely filed all Tax Returns
in respect of the Conveyed Assets or the Business that (a) are required to be
filed (taking into account extensions) on or before the Transfer Date, or (b)
are required to be filed (taking into account extensions) after the Transfer
Date and (i) are with respect to Income Taxes and are required to be filed on a
separate Tax Return basis for any tax period ending on or before the Transfer
Date, or (ii) are required under applicable law to be filed by Seller. Buyer
shall prepare or cause to be prepared and shall file or cause to be filed all
other Tax Returns required to be filed after the Transfer Date with respect to
the Conveyed Assets or the Business. Any such Tax Returns that include periods
ending on or before the Transfer Date or that include the activities of the
Business prior to the Transfer Date shall, insofar as they relate to Seller
prior to the Transfer Date, be on a basis consistent with the last previous such
Tax Returns filed in respect of the Conveyed Assets or the Business, unless
Seller or Buyer, as the case may be, concludes that there is no reasonable basis
for such position. Neither Buyer nor any of its Affiliates shall file any
amended Tax Returns for any periods for or in respect of the Conveyed Assets or
the Business with respect to which Buyer is not obligated to prepare or cause to
be prepared the original such Tax Returns pursuant to this Section 7.1 without
the prior written consent of Seller.
Section 7.2 PAYMENT OF TAXES. Seller shall pay or cause to be paid (i)
all Taxes due with respect to Tax Returns which Seller is obligated to prepare
and file or cause to be prepared and filed pursuant to Section 7.1, and (ii) all
Taxes due on or before the Transfer Date for which no Tax Return is required to
be filed. Buyer shall pay or cause to be paid all Taxes due with respect to
those Tax Returns which Buyer is obligated to prepare and file or cause to be
prepared and filed pursuant to Section 7.1 other than Taxes which Seller shall
pay or cause to be paid in accordance with the preceding sentence, provided,
that any liability for Income Taxes attributable to the Conveyed Assets or the
Business for any period after the Transfer Date shall be the sole responsibility
of Buyer.
Section 7.3 REFUNDS. Seller shall be entitled to retain, or receive
immediate payment from Buyer or any of its subsidiaries or Affiliates, of any
refund or credit with respect to Taxes (including, without limitation, refunds
and credits arising by reason of amended Tax Returns filed after the Transfer
Date or otherwise) with respect to any Tax period ending on or before the
Transfer Date relating to the Conveyed Assets or the Business. Buyer shall be
entitled to retain, or receive immediate payment from Seller of, any refund or
credit with respect to Taxes with respect to any taxable period beginning after
the Transfer Date relating to any of the Conveyed Assets or the Business.
Section 7.4 TAX COOPERATION. Each of Buyer and Seller shall provide the
other party with such information and records and make such of its officers,
directors, employees and agents available as may reasonably be requested by such
other party in connection with the preparation of any Tax Return or any audit or
other Action that relates to Taxes with respect to the Conveyed Assets or the
Business.
Section 7.5 TAX INDEMNIFICATION.
(a) Seller shall be responsible for and shall indemnify, defend and
hold Buyer and its Affiliates harmless from and against (i) all liability for
Taxes, other than Income Taxes, with
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respect to the Conveyed Assets or the Business for any taxable period that ends
on or before the Transfer Date including, without limitation, (ii) all liability
for Income Taxes with respect to the Conveyed Assets or the Business for any
taxable period, or portion thereof, that ends on or before the Transfer Date,
(iii) all liability for any breach of Seller's representations and warranties
contained in Section 3.16, and (iv) all liability for reasonable legal,
accounting and appraisal fees and expenses with respect to any item described in
clauses (i), (ii) or (iii) above; provided, however, that Seller's
responsibility and indemnity obligation for Taxes pursuant to this Section
7.5(a) shall be reduced by refunds of Taxes with respect to such periods
received after the Closing Date by Buyer or any of its Affiliates and not
previously remitted to Seller. Seller's obligation to indemnify, defend or hold
harmless Buyer or any of its Affiliates from any liability shall terminate
effective with the expiration of the applicable statute of limitations
(including extensions) in respect of such liability.
(b) Buyer shall be responsible for and shall indemnify, defend and hold
Seller and its Affiliates harmless from and against (i) all liability for Taxes
with respect to the Conveyed Assets or Business, except to the extent Seller is
otherwise required to indemnify Buyer for such Tax pursuant to Section 7.5(a),
and (ii) all liability for reasonable legal, accounting and appraisal fees and
expenses with respect to any item described in clause (i). Purchaser's
obligation to indemnify, defend or hold harmless Seller or any of its Affiliates
from any liability shall terminate effective with the expiration of the
applicable statute of limitations (including extensions) in respect of such
liability.
(c) Any indemnity payment required to be made pursuant to this Section
7.5 shall be paid within thirty (30) days after the indemnified party makes
written demand upon the indemnifying party, but in no case earlier than five (5)
Business Days prior to the date on which the relevant Taxes are required to be
paid to the relevant Governmental Authority together with the submission of
evidence reasonably establishing the right to receive the payment.
Section 7.6 TAX CONTESTS.
(a) If a claim shall be made by any Governmental Authority (a "Tax
Claim") which, if successful, might result in an indemnity payment to Buyer or
any of its Affiliates pursuant to Section 7.5, Buyer shall promptly notify
Seller of such claim; provided, however, that the failure to give such notice
shall not affect the indemnification provided hereunder except to the extent
Seller has actually been prejudiced as a result of such failure and for this
purpose, any failure to give such notice that results in Seller not controlling
or participating in any Actions with respect to such Tax Claim shall be deemed
to prejudice Seller.
(b) With respect to any Tax Claim relating to a taxable period ending
on or before the Closing Date, Seller shall control all Actions and may make all
decisions taken in connection with such Tax Claim (including selection of
counsel) and, without limiting the foregoing, may in its sole discretion pursue
or forego any and all administrative appeals, hearings, conferences and other
Actions with any Governmental Authority with respect thereto, and may, in its
sole discretion, either pay the Tax claimed and sue for a refund where
applicable Law permits such refund suits or contest the Tax Claim in any
permissible manner. Buyer shall be entitled to be informed of such Tax Claim
within a reasonable time after such Tax Claim is asserted and the
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developments with respect to such Tax Claim at any administrative meeting,
conference, hearing or other Actions.
(c) Except as otherwise provided in Section 7.6(b), Buyer shall control
all Actions with respect to Taxes for any taxable period beginning after the
Closing Date, and may make all decisions taken in connection with such Tax Claim
(including selection of counsel) and, without limiting the foregoing, may in its
sole discretion pursue or forego any and all administrative appeals, hearings,
conferences and other Actions with any Governmental Authority with respect
thereto, and may, in its sole discretion, either pay the Tax claimed and sue for
a refund where applicable Law permits such refund suits or contest the Tax Claim
in any permissible manner. Seller shall be entitled to be informed of such Tax
Claim within a reasonable time after such Tax Claim is asserted and the
developments with respect to such Tax Claim at any administrative meeting,
conference, hearing or other Actions.
(d) Buyer and its Affiliates, on the one hand, and Seller and its
Affiliates, on the other, shall cooperate in contesting any Tax Claim, which
cooperation shall include the retention and (upon request) the provision to the
requesting party of records and information which are reasonably relevant to
such Tax Claim, and making employees available on a mutually convenient basis to
provide additional information or explanation of any material provided hereunder
or to testify at proceedings relating to such Tax Claim.
ARTICLE VIII
[Reserved.]
ARTICLE IX
CONDITIONS OF BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction on or prior to the Closing Date
of all of the following conditions:
Section 9.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER.
(a) The representations and warranties of Seller contained in this
Agreement (which for purposes of this paragraph shall be read as though none of
them contain any Adverse Affect, Change or Effect or other materiality qualifier
individually or in the aggregate) shall be true and correct on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date (except for representations and warranties
that speak as of a specific date or time, which need only be true and correct as
of such date or time), except where the failure of the representations and
warranties in the aggregate to be true and correct in all respects would not
have an Adverse Effect on the Business.
(b) Seller shall have performed in all material respects each
obligation and agreement and shall have complied in all material respects with
each covenant to be performed and complied with by them hereunder at or prior to
the Closing (other than Seller's covenants
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pursuant to Section 2.2 (a) and (c) hereof with respect to delivery of documents
at the Closing, which shall be performed in all respects).
(c) Buyer shall receive at or prior to the Closing a certificate as to
the matters set forth in paragraphs (a) and (b) of this Section 9.1, dated the
Closing Date, and validly executed by the Vice President of Seller.
Section 9.2 FILINGS; CONSENTS; WAITING PERIODS. All waiting periods
applicable under the HSR Act and the FTA shall have expired or been terminated,
and all registrations, filings, applications, notices, consents, approvals
(including consents and approvals set forth on Schedule 3.12 hereto pursuant to
Section 3.12(d) hereof which are designated as Closing consents), Orders,
qualifications and waivers required to be obtained or made as of the Closing
Date in order to consummate the transactions contemplated hereby and to transfer
the Licenses and Contracts contemplated hereby shall have been filed, made or
obtained, except for such registrations, filings, notices, consents, approvals,
Orders, qualifications and waivers the lack of which would not reasonably be
expected to have an Adverse Effect on the Business.
Section 9.3 NO INJUNCTION. At the Closing Date, there shall be no Order
of any nature of any Governmental Authority of competent jurisdiction that is in
effect that restrains or prohibits the consummation of the transactions
contemplated hereby, and no Law shall have been enacted by any Governmental
Authority which prevents consummation of the transactions contemplated hereby.
Section 9.4 FINANCING. Buyer shall have obtained financing on terms
reasonably satisfactory to it that is adequate to fund the Purchase Price.
ARTICLE X
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to consummate the transactions contemplated by this
Agreement is subject to the satisfaction on or prior to the Closing Date of all
of the following conditions:
Section 10.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER.
(a) The representations and warranties of Buyer contained in this
Agreement (which for purposes of this paragraph shall be read as though none of
them contain any Adverse Affect, Change or Effect or other materiality qualifier
individually or in the aggregate) shall be true and correct on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date (except for representations and warranties
that speak as of a specific date or time, which need only be true and correct as
of such date or time), except where the failure of the representations and
warranties in the aggregate to be true and correct in all respects would not
have an Adverse Effect on Buyer or Buyer and its subsidiaries, taken as a whole.
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(b) Buyer shall have performed in all material respects each obligation
and agreement and shall have complied in all material respects with each
covenant to be performed and complied with by it hereunder at or prior to the
Closing.
(c) Seller shall receive at or prior to the Closing a certificate as to
the matters set forth in paragraphs (a) and (b) of this Section 10.1, dated the
Closing Date, and validly executed by an executive officer of Buyer on behalf of
Buyer.
Section 10.2 FILINGS: CONSENTS: WAITING PERIODS. All waiting periods
applicable under the HSR Act and the FTA shall have expired or been terminated,
and all registrations, filings, applications, notices, consents, approvals,
Orders, qualifications and waivers required to be obtained or made as of the
Closing Date in order to consummate the transactions contemplated hereby shall
have been filed, made or obtained, except for such registrations, filings,
notices, consents, approvals, Orders, qualifications and waivers the lack of
which would not reasonably be expected to have an Adverse Effect on Buyer or
Buyer and its subsidiaries, taken as a whole.
Section 10.3 NO INJUNCTION. At the Closing., Date, there shall be no
Order of any nature of any Governmental Authority of competent jurisdiction that
is in effect that restrains or prohibits the consummation of the transactions
contemplated hereby, and no Law shall have been enacted by any Governmental
Authority which prevents consummation of the transactions contemplated hereby.
ARTICLE XI
SURVIVAL: INDEMNIFICATION
Section 11.1 SURVIVAL PERIODS. Except as provided in Section 11.4, all
representations and warranties contained or made in, or in connection with, this
Agreement or in any Schedule, or any certificate, document or other instrument
delivered in connection herewith, shall survive the Closing for a period of
eighteen months.
Section 11.2 INDEMNIFICATION BY SELLER. From and after the Closing
Date, Seller shall indemnify and hold harmless Buyer, its Affiliates, each of
their directors, officers, employees and agents, and each of the heirs,
executors, successors, transferees and assigns of any of the foregoing
(collectively, the "Buyer Indemnified Parties") from and against any and all
damages, claims, losses, expenses, costs, obligations and liabilities, including
without limitation liabilities for all reasonable attorneys', accountants', and
experts' fees and expenses including those incurred to enforce the terms of this
Agreement (collectively, "Covered Liabilities"), suffered, incurred by or
asserted, directly or indirectly, against the Buyer Indemnified Parties by
reason or arising out of (i) any breach of any representation or warranty,
covenant or agreement of Seller contained herein or in any instrument or
certificate delivered pursuant hereto (each of which for purposes of this
paragraph shall be read as though none of them contains any Adverse Affect,
Change or Effect or other materiality qualifier), (ii) any Retained Liability or
(iii) any Environmental Liability; provided, however, that, except for a breach
of any representation or warranty in Section 3.15, Seller shall not be required
to indemnify the Buyer Indemnified Parties with respect to any claim for
indemnification pursuant to clause (i) of this Section 11.2 unless and until the
aggregate amount of all claims against Seller under this Section 11.2 exceeds
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$3,800,000 and then only to the extent such aggregate amount exceeds such
amount, and; provided, further, that in no event shall Seller be required to pay
or otherwise be liable for an amount in excess of $150,000,000 with respect to
claims made under clause (i) and (iii) of this Section. The indemnity provided
in this Section 11.2 shall not apply if the Covered Liability previously has
been recovered under Section 5.11 or Section 5.23 hereof.
Section 11.3 INDEMNIFICATION BY BUYER. From and after the Closing Date,
Buyer shall indemnify and hold harmless Seller, its Affiliates, each of their
directors, officers, employees and agents, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "Seller
Indemnified Parties") from and against any and all Covered Liabilities suffered,
incurred by or asserted, directly or indirectly, against by the Seller
Indemnified Parties by reason or arising out of (i) any breach of any
representation or warranty, covenant or agreement of Buyer contained herein or
in any instrument or certificate delivered pursuant hereto (each of which for
purposes of this paragraph shall be read as though none of them contains any
Adverse Affect, Change or Effect or other materiality qualifier), or (ii) any
Assumed Liability; provided, however, that Buyer shall not be required to
indemnify the Seller Indemnified Parties with respect to any claim made for
indemnification pursuant to clause (i) of this Section 11.3 unless and until the
aggregate amount of all claims against Buyer under this Section 11.3 exceeds
$3,800,000 and then only to the extent such aggregate amount exceeds such
amount, and; provided, further, that in no event shall Buyer be required to pay
or otherwise be liable for an amount in excess of $150,000,000 with respect to
claims made under clause (i) of this Section.
Section 11.4 TIME LIMIT ON CERTAIN INDEMNIFICATION CLAIMS. Claims by
Buyer Indemnified Parties for breaches of the representations and warranties of
Seller in Section 3.1 hereof or by Seller Indemnified Parties for breaches of'
the representations and warranties of Buyer in Section 4.1 hereof in each case
relating to corporate formation, may be asserted indefinitely. Claims for
breaches of all other representations and warranties in Sections 3.1 and 4.1,
and for breaches of representations and warranties in Sections 3.15 and 3.16 may
be asserted until 60 days after the running of the applicable statute of
limitations. Time periods for indemnities provided for in ancillary agreements
will be governed by the provisions of such ancillary agreements.
Section 11.5 INDEMNIFICATION PROCEDURES.
(a) If any indemnified party receives notice of the assertion of any
Third-Party Claim with respect to which an indemnifying party is obligated under
this Agreement to provide indemnification, such indemnified party shall give
such indemnifying party written notice thereof (together with a copy of such
Third-Party Claim, process or other legal pleading) promptly after becoming
aware of such Third-Party Claim; provided, however, that the failure of any
indemnified party to give notice as provided in this Section 11.5 shall not
relieve any indemnifying party of its obligations under this Section 11.5,
except to the extent that such indemnifying party is actually prejudiced by such
failure to give notice. Such notice shall describe such Third-Party Claim in
reasonable detail.
(b) An indemnifying party, at such indemnifying party's own expense and
through counsel chosen by such indemnifying party (which counsel shall be
reasonably acceptable to the indemnified party), may elect to defend any
Third-Party Claim; provided, however, that by
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assuming such defense, the indemnifying party shall be deemed to have agreed
that it will be liable for such Third-Party Claim. If an indemnifying party
elects to defend a Third-Party Claim, then, within ten (10) business days after
receiving notice of such Third-Party Claim (or sooner, if the nature of such
Third-Party Claim so requires), such indemnifying party shall notify the
indemnified party of its intent to do so, and such indemnified party shall
cooperate in the defense of such Third-Party Claim (and pending such notice and
assumption of defense, an indemnified party may take such steps to defend
against such Third-Party Claim as, in such indemnified party's good-faith
judgment, are appropriate to protect its interests). Such indemnifying party
shall pay such indemnified party's reasonable out-of-pocket expenses incurred in
connection with such cooperation. Such indemnifying party shall keep the
indemnified party reasonably informed as to the status of the defense of such
Third-Party Claim. After notice from an indemnifying party to an indemnified
party of its election to assume the defense of a Third-Party Claim, such
indemnifying party shall not be liable to such indemnified party under this
Section 11.5 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than those
expenses referred to in the preceding sentence; provided, however, that such
indemnified party shall have the right to employ one law firm as counsel,
together with a separate local law firm in each applicable jurisdiction
("Separate Counsel"), to represent such indemnified party in any action or group
of related actions (which firm or firms shall be reasonably acceptable to the
indemnifying party) if, in such indemnified party's reasonable judgment at any
time, either a conflict of interest between such indemnified party and such
indemnifying party exists in respect of such claim, or there may be defenses
available to such indemnified party which are different from or in addition to
those available to such indemnifying party and the representation of both
parties by the same counsel would be inappropriate, and in that event (i) the
reasonable fees and expenses of such Separate Counsel shall be paid by such
indemnifying party (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one Separate Counsel
(excluding local counsel) with respect to any Third-Party Claim (even if against
multiple indemnified parties)), and (ii) each of such indemnifying party and
such indemnified party shall have the right to conduct its own defense in
respect of such claim. If an indemnifying party elects not to defend against a
Third-Party Claim, or fails to notify an indemnified party of its election as
provided in this Section 11.5 within the period of ten (10) business days
described above, the indemnified party may defend, compromise, and settle such
Third-Party Claim and shall be entitled to indemnification hereunder (to the
extent permitted hereunder); provided, however, that no such indemnified party
may compromise or settle any such Third-Party claim without the prior written
consent of the indemnifying party, which consent shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, the indemnifying party shall
not, without the prior written consent of the indemnified party, (i) settle or
compromise any Third-Party Claim or consent to the entry of any judgment which
does not include as an unconditional term thereof the delivery by the claimant
or plaintiff to the indemnified party of a written release from all liability in
respect of such Third-Party Claim, or (ii) settle or compromise any Third-Party
Claim in any manner that would reasonably be expected to have a material adverse
effect on the indemnified party.
Section 11.6 CERTAIN LIMITATIONS.
(a) The amount of any Covered Liabilities for which indemnification is
provided under this Agreement shall be net of any amounts actually recovered by
the indemnified party
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from third parties (including amounts actually recovered under insurance
policies, but only to the extent any recovered insurance proceeds exceed costs
of collecting such proceeds and premium increases, whether retrospective or
prospective, that are certified by the underwriter to result from the claim for
such proceeds) with respect to such Covered Liabilities. Any indemnifying party
hereunder shall be subrogated to the rights of the indemnified party upon
payment in full of the amount of the relevant indemnifiable loss. An insurer who
would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto or, solely by virtue of the indemnification
provision hereof, have any subrogation rights with respect thereto. If any
indemnified party recovers an amount from a third-party in respect of an
indemnifiable loss for which indemnification is provided in this Agreement after
the full amount of such indemnifiable loss has been paid by an indemnifying
party or after an indemnifying party has made a partial payment of such
indemnifiable loss and the amount received from the third-party exceeds the
remaining unpaid balance of such indemnifiable loss, then the indemnified party
shall promptly remit to the indemnifying party the excess of (A) the sum of the
amount theretofore paid by such indemnifying party in respect of such
indemnifiable loss plus the amount received from the third-party in respect
thereof, less (B) the full amount of such Covered Liabilities.
(b) Any indemnity payment made under this Agreement shall be treated by
Buyer and Seller as an adjustment to the Purchase Price, and Seller and Buyer
agree not to take any position inconsistent therewith for any purpose.
(c) Claims indemnifiable hereunder that are asserted within the periods
permitted under Sections 11.1 and 11.4 shall, notwithstanding the passage of
time beyond such periods, remain indemnifiable until enforced or compromised and
satisfied in favor of, or withdrawn by, the Indemnitee. The limitations on
liability for indemnification set forth in the proviso clauses of Sections 11.2
and 11.3 shall not apply to any Covered Liability resulting from (i) a breach of
representation or warranty contained herein committed with the Knowledge of
Seller or Buyer, as the case may be, or (ii) a willful intentional breach of a
covenant within the control of Seller or Buyer, as the case may be.
Section 11.7 EXCLUSIVITY OF INDEMNIFICATION. This Article XI shall not
limit any right of indemnification for Tax Matters (for which Article VII is
applicable) or of indemnification for intellectual property matters (for which
Article V and ancillary agreements are applicable).
Section 11.8 SOLE REMEDY/WAIVER. The parties hereto acknowledge and
agree that the remedies provided for in this Article XI or expressly provided
for elsewhere in this Agreement or any ancillary agreement shall be the parties'
sole and exclusive remedies after Closing with respect to the subject matter of
this Agreement. In furtherance of the foregoing, the parties hereby waive, to
the fullest extent permitted by applicable Law, any and all other rights, claims
and causes of action with respect to the subject matter of this Agreement
(including rights of contribution, if any) known or unknown, foreseen or
unforeseen, which exist or may arise in the future, that it may have against
Seller or any of its Affiliates, or Buyer or any of its Affiliates, as the case
may be, arising under or based upon any Law or Order.
ARTICLE XII
TERMINATION
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Section 12.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing by:
(a) The mutual written consent of Seller and Buyer; or
(b) Either Seller or Buyer if the Closing has not occurred by the close
of business on March 15, 1999 (the "Termination Date") (which date shall be
extended until two (2) days after expiration of the notice period under the HSR
Act, the FTA or receipt by each of notice of clearance under the HSR Act), and
if the failure to consummate the transactions contemplated hereby on or before
such date did not result from the failure by the party seeking termination of
this Agreement to fulfill any undertaking or commitment provided for herein that
is required to be fulfilled prior to Closing; provided, however, that in the
event that Seller fails to deliver the Additional Statements to Buyer on or
prior to January 31, 1999, then the Termination Date shall be extended by one
calendar day for each calendar day occurring between January 31, 1999 and the
date on which the Additional Statements are delivered (including such date of
delivery); provided, however, that if the Termination Date as so extended would
fall on a Saturday, Sunday or Federal U.S. banking holiday, then the Termination
Date shall be extended to the next business day.
(c) Seller, provided that it is not then in breach of any of its
obligations hereunder, if Buyer fails to perform in any material respect any
covenant in this Agreement when performance thereof is due or Buyer shall have
breached in any material respect any of the representations or warranties
contained in this Agreement and does not cure the failure or breach within
thirty (30) business days after Seller delivers written notice thereof; or
(d) Buyer, provided it is not then in breach of any of its obligations
hereunder, if Seller fails to perform in any material respect any covenant in
this Agreement when performance thereof is due or Seller shall have breached in
any material respect any of the representations and warranties contained in this
Agreement and does not cure the failure or breach within thirty (30) business
days after Buyer delivers written notice thereof.
Section 12.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination of this Agreement by either or both of Seller and Buyer pursuant to
Section 12.1, written notice thereof shall forthwith be given by the terminating
party to the other party hereto, and this Agreement shall thereupon terminate
and become void and have no effect, and the transactions contemplated hereby
shall be abandoned (including, without limitation, operation of the Business for
the benefit of Buyer and no amounts shall be payable in respect thereof) without
further action by the parties hereto, except that the provisions of Sections
5.l(b) and 13.4 hereof shall survive the termination of this Agreement;
provided, however, that such termination shall not relieve any party hereto of
any liability for any breach of this Agreement. If this Agreement is terminated
as provided herein, all filings, applications and other submissions made
pursuant to Sections 3.8 and 4.3 hereof shall, to the extent practicable, be
withdrawn from the agency or other persons to which they were made.
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ARTICLE XIII
MISCELLANEOUS
Section 13.1 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party.
Section 13.2 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement
shall be governed by and construed in accordance with the laws of Korea without
reference to the choice of law principles thereof. Buyer and Seller consent to
and hereby submit to the non-exclusive jurisdiction of the Seoul District Court
located in the Republic of Korea in connection with any action, suit or
proceeding arising out of or relating to this Agreement, and each of the parties
hereto irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
Section 13.3 ENTIRE AGREEMENT. This Agreement (including agreements
incorporated herein), the Confidentiality Agreement and the Schedules and
Exhibits hereto contain the entire agreement between the parties with respect to
the subject matter hereof and there are no agreements, understandings,
representations or warranties between the parties other than those set forth or
referred to herein.
Section 13.4 EXPENSES. Except as set forth in this Agreement, whether
the transactions contemplated hereby are or are not consummated, all legal and
other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses; provided that Buyer shall pay all costs and expenses incurred in
connection with an audit of the Business in accordance with U.S. generally
accepted accounting principles, which costs and expenses shall not exceed
$200,000. In addition, Buyer shall pay all costs and expenses incurred in
connection with the preparation of the Additional Statements. Notwithstanding
the foregoing, provided that Seller shall have performed, in all material
respects, its obligations under this Agreement, in the event that this Agreement
is terminated by Seller pursuant to Section 12.1(b) hereof due to the failure of
Buyer to comply with the condition provided in Section 9.4 hereof on or prior to
the date of such termination, then Buyer shall promptly reimburse Seller for its
actual legal, accounting and other professional costs, fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby up to a maximum amount of $1,000,000.
Section 13.5 NOTICES. All notices hereunder shall be sufficiently given
for all purposes hereunder if in writing and delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telex or other electronic transmission service to the appropriate
address or number as set forth below. Notices to Seller shall be addressed to:
Samsung Electronics Co., Ltd.
Samsung Main Building
250, 2-Ka, Taepyung-Ro, Chung-Ku
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Seoul, Korea
Attention: Director, Legal Department
Telecopy No.: 822-727-7179
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Attention: Patrick J. Dooley, Esq.
Stephen E. Older, Esq.
Telecopy No: (212) 872-1002
or at such other address and to the attention of such other Person as Seller may
designate by written notice to Buyer. Notices to Buyer shall be addressed to:
Fairchild Semiconductor Corporation
333 Western Avenue, M.S. 01-00
South Portland, Maine 04106
Attention: Mr. Joseph R. Martin, Executive Vice President and Chief Financial
Officer
Daniel E. Boxer, Esq., Executive Vice President and General
Counsel
Telecopy No. (207) 761-6020
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attention: G. Daniel O'Donnell, Esq.
Telecopy No. (215) 994-2222
or at such other address and to the attention of such other Person as Buyer may
designate by written notice to Seller.
Section 13.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that no party hereto will assign its
rights or delegate its obligations under this Agreement without the express
prior written consent of each other party hereto, except that (i) Buyer may
assign its rights hereunder as collateral security to any bona fide financial
institution engaged in acquisition financing in the ordinary course providing
financing to consummate the transactions contemplated hereby or any bona fide
financial institution engaged in acquisition financing in the ordinary course
through which such financing is refunded, replaced or refinanced and any of the
foregoing financial institutions may assign such rights in connection with a
sale of Buyer in the form then being conducted by Buyer substantially as an
entirety, (ii) Seller and Buyer each may assign its rights and obligations under
this Agreement to any Entity that succeeds to substantially all of its assets
and liabilities and (iii) Buyer may assign its rights
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hereunder to one or more of its affiliates to be established in Korea; provided,
however, that Buyer shall continue to remain liable for all of its obligations
and liabilities hereunder.
Section 13.7 HEADINGS: DEFINITIONS. The section and article headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated.
Section 13.8 AMENDMENT. This Agreement may not be amended, modified,
superseded, canceled, renewed or extended except by a written instrument signed
by the party to be charged therewith.
Section 13.9 WAIVER; EFFECT OF WAIVER. No provision of this Agreement
may be waived except by a written instrument signed by the party waiving
compliance. No waiver by any party hereto of any of the requirements hereof or
of any of such party's rights hereunder shall release the other parties from
full performance of their remaining obligations stated herein. No failure to
exercise or delay in exercising on the part of any party hereto any right, power
or privilege of such party shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege by such party.
Section 13.10 NO THIRD-PARTY BENEFICIARIES. Nothing in this Agreement,
express or implied, is intended to or shall (i) confer on any Person other than
the parties hereto and their respective successors or assigns any rights
(including third-party beneficiary rights), remedies, obligations or liabilities
under or by reason of this Agreement, or (ii) constitute the parties hereto as
partners or as participants in a joint venture. This Agreement shall not provide
third parties with any remedy, claim, liability, reimbursement, cause of action
or other right in excess of those existing without reference to the terms of
this Agreement.
Section 13.11 INTERPRETATION; ABSENCE OF PRESUMPTION.
(a) For the purposes hereof, (i) words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other gender as the context requires, (ii) the terms "hereof,"
"herein," and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including all of the
Schedules hereto) and not to any particular provision of this Agreement, and
Article, Section, paragraph and Schedule references are to the Articles,
Sections, paragraphs and Schedules to this Agreement unless otherwise specified,
(iii) the word "including" and words of similar import when used in this
Agreement means "including, without limitation," unless the context otherwise
requires or unless otherwise specified, (iv) the word "or" shall not be
exclusive, (v) provisions shall apply, when appropriate, to successive events
and transactions, and (vi) all references to any period of days shall be deemed
to be to the relevant number of calendar days.
(b) This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
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(c) For the purposes of this Agreement, a "subsidiary" of a Person
means any corporation more than 50% of whose outstanding voting securities are
directly or indirectly owned by such other Person.
Section 13.12 [Reserved.]
Section 13.13 SPECIFIC PERFORMANCE. The parties hereto each acknowledge
that, in view of the uniqueness of the subject matter hereof, the parties hereto
would not have an adequate remedy at law for money damages in the event that
this Agreement were not performed in accordance with its terms, and therefore
agree that the parties hereto shall be entitled to specific enforcement of the
terms hereof in addition to any other remedy to which the parties hereto may be
entitled at law or in equity.
Section 13.14 REMEDIES CUMULATIVE. Except as otherwise provided in
Article XI, all rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party. Notwithstanding the
foregoing, however, no party hereto shall be liable for and no remedy under this
Agreement or at law or in equity shall include, provide for or permit the
payment of multiple, exemplary, punitive or consequential damages or any
equitable equivalent thereof or substitute therefor, and the burden shall be on
the party claiming loss to show actual loss in the amount claimed.
Section 13.15 GOVERNING LANGUAGE. This Agreement is written in the
English language, and in the event of a conflict between this Agreement and any
translation thereof the English version of this Agreement shall prevail.
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their behalf as of the date first written above.
SAMSUNG ELECTRONICS CO., LTD.
By: ________________________________
Name: ______________________________
Title: _____________________________
FAIRCHILD SEMICONDUCTOR CORPORATION
By: ________________________________
Name: ______________________________
Title: _____________________________
<PAGE>
List of Omitted Schedules and Exhibits
(This list is not a part of the Business Transfer Agreement)
SCHEDULE 1 BUCHEON FACILITY
SCHEDULE II REAL PROPERTY
SCHEDULE III EXCLUDED ASSETS
SCHEDULE IV SELLER PERSONS WITH KNOWLEDGE
SCHEDULE V RETAINED LIABILITIES
SCHEDULE 2.5 ALLOCATION OF THE CONSIDERATION
SCHEDULE 3.1(b) COMPLIANCE WITH CONTRACT AND ORDER, ETC.
SCHEDULE 3.2 FINANCIAL STATEMENTS
SCHEDULE 3.4(c) OWNERSHIP INTEREST
SCHEDULE 3.4(f) ZONING REGULATIONS
SCHEDULE 3.4(g) UTILITIES
SCHEDULE 3.5(a) ASSIGNED TECHNOLOGY
SCHEDULE 3.5(b) SAMSUNG LICENSED IP
SCHEDULE 3.5(c) THIRD-PARTY LICENSED IP
SCHEDULE 3.5(d) CLAIMS
SCHEDULE 3.5(e) OTHER INTELLECTUAL PROPERTIES
SCHEDULE 3.7 LITIGATION; ORDERS
SCHEDULE 3.8 LICENSES
SCHEDULE 3.9(i) LABOR MATTERS
SCHEDULE 3.9(ii) LIST OF EMPLOYEES
SCHEDULE 3.10(i) COMPLIANCE WITH LAWS
SCHEDULE 3.10(ii) MATERIAL LICENSES ISSUED BY GOVERNMENTAL AUTHORITY
SCHEDULE 3.11 SELLER BENEFIT PLANS
SCHEDULE 3.12 MATERIAL CONTRACTS
<PAGE>
SCHEDULE 3.15 ENVIRONMENTAL MATTERS
SCHEDULE 3.16 TAX MATTERS
SCHEDULE 5.4 CONDUCT OF BUSINESS
SCHEDULE 5.5 KEY PEOPLE
SCHEDULE 6.1 EMPLOYEES
EXHIBIT A LIST OF INSTRUMENTS AND DOCUMENTS PROVIDED TO BUYER
EXHIBIT B LIST OF INSTRUMENTS AND DOCUMENTS PROVIDED TO SELLER
EXHIBIT C INTELLECTUAL PROPERTY ASSIGNMENT AND LICENSE AGREEMENT
EXHIBIT D TRANSITIONAL SERVICES AGREEMENT
EXHIBIT E ASSEMBLY AND TEST SERVICES AGREEMENT
EXHIBIT F TRADEMARK LICENSE AGREEMENT
EXHIBIT G FOUNDRY SALE AGREEMENT
EXHIBIT H PRODUCT SUPPLY AGREEMENT
EXHIBIT I EPI SERVICES AGREEMENT
EXHIBIT J MASK WORKS SUPPLY AGREEMENT
EXHIBIT 2(a)(1) PROMISSORY NOTE
EXHIBIT 2(a)(2) LETTER AGREEMENT
EXHIBIT 6(a) SECURITIES
EXHIBIT 6(b) CONTRACTS
EXHIBIT 6(e) PERMITS AND LICENSES
EXHIBIT 14 SUBCON EQUIPMENT SUMMARY
<PAGE>
Exhibit 2.2
CLOSING AGREEMENT
THIS CLOSING AGREEMENT ("Agreement") is made as of the 13th day of April,
1999 between Samsung Electronics Co., Ltd., a Korean corporation (hereinafter
"Seller"), Fairchild Korea Semiconductor Ltd., a Korean corporation
(hereinafter "Buyer"), and Fairchild Semiconductor Corporation, a Delaware
corporation (hereinafter "Fairchild").
WHEREAS:
A. Seller and Fairchild entered into that certain Business Transfer
Agreement, dated December 20, 1998, which agreement was subsequently
assigned to Buyer by Fairchild (the "Business Transfer Agreement"); and
B. Seller and Buyer desire to amend certain terms and provisions of the
Business Transfer Agreement in order to clarify or modify certain issues
that have arisen since the date of the Business Transfer Agreement.
NOW, THEREFORE, in consideration of the mutual premises stated herein, and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
1. The parties hereto agree that the Business Transfer Agreement shall be
amended to the extent set forth herein. All capitalized terms and
expressions, not otherwise defined herein, shall have the respective meanings
assigned to them in the Business Transfer Agreement.
2. (a) Subject to the satisfaction or waiver of the conditions precedent
set forth in Articles IX and X of the Business Transfer Agreement, the
Closing Date under the Business Transfer Agreement shall be April 13, 1999.
At the Closing, Seller shall sell, convey, assign and transfer to Buyer, and
Buyer shall acquire and purchase from Seller, all of the Conveyed Assets,
free and clear of all Liens (other than Permitted Liens), and Buyer shall
assume the Assumed Liabilities. Simultaneously with such sale, conveyance,
assignment and transfer, Buyer shall issue a promissory note substantially
in the form attached hereto as Exhibit 2(a)(1) (the "Note") in the principal
amount (the "Closing Note Amount") of US$407,273,391.78. The Closing Note
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Amount represents the Purchase Price after giving effect to the adjustments
set forth in that certain letter dated the date hereof between Seller and
Fairchild (the "Letter Agreement"), a copy of which is attached hereto as
Exhibit 2(a)(2) and the terms of which are incorporated herein as part of
this Agreement, and includes interest on the Purchase Price at the rate of
10% per annum from and including the Closing Date to but excluding the
Maturity Date (as defined).
(b) Fairchild shall be a co-obligor under the Note and the Note will
mature on April 19, 1999 (the "Maturity Date"). The Note may be prepaid at
any time and from time to time without penalty.
(c) If Buyer pays to Seller an amount equal to US$406,605,000 plus
interest thereon at a rate of 10% per annum from and including the Closing
Date to but excluding the date of payment (the "Prepayment Amount"), Seller
shall return the Note to Buyer for cancellation upon such payment. Seller
shall indemnify Buyer for any and all losses, damages, claims and liabilities
which Buyer may incur as a result of, in connection with, or arising from the
failure of Seller to return the Note to Buyer upon payment of the Prepayment
Amount. It is the intention of Buyer to pay the Prepayment Amount as soon as
sufficient funds are available in Korea.
(d) In the event that the Note is not fully paid on or prior to the
Maturity Date, Buyer shall immediately transfer the Conveyed Assets back to
Seller and shall take all necessary or required actions to ensure that such
transfer is promptly completed. Simultaneously, Seller shall re-assume the
Assumed Liabilities from Buyer and shall take all necessary or required
actions to ensure that such re-assumption is promptly completed. Buyer will
be responsible and shall indemnify Seller for all costs and expenses
(including any taxes) associated with any such transfer back of the Conveyed
Assets or such re-assumption of the Assumed Liabilities.
3. The Conveyed Assets shall not include, and the Excluded Assets shall
include, all Accounts Receivable of the Business arising on or prior to the
Closing Date ("Closing Receivables"). The Assumed Liabilities shall not
include, and the Retained Liabilities shall include, all trade accounts
payable of the Business incurred on or prior to the Closing Date ("Closing
Payables").
4. All payments under the Letter Agreement shall be made by wire transfer of
immediately available funds to an account
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designated by the party receiving the payment. The party paying any amount
under the Letter Agreement shall include, with such payment, an amount equal
to interest on the amount paid calculated from the Closing Date to the date
of such payment, at an annual rate of 10% based on the actual number of days
elapsed (including the Closing Date but excluding the date of payment) and a
365-day year.
5. Within seven (7) days after the Closing Date, Seller shall provide Buyer
with a statement of the accounts receivables/accounts payables netting amount
as set forth in Note 2 to the Letter Agreement, and within forty (40) days
after the Closing Date, Seller shall provide Buyer with a statement
calculating the items set forth in (a) and (b) of Note 1 to the Letter
Agreement, in each case, together with a reasonable explanation of the basis
for Seller's determination thereof. If Buyer does not provide Seller with
written notice (a "Dispute Notice") of Buyer's disagreement with any aspect
of such statements within five (5) days of receiving it, Buyer shall be deemed
to have agreed to Seller's determination, and such determination shall be
final and binding. If Buyer provides a Dispute Notice within such time
period, Seller and Buyer shall use their Best Efforts to resolve their
disagreement, and if such disagreement is not resolved within five (5) days
after delivery of the Dispute Notice, then the parties shall resolve their
disagreement as follows:
(a) Either party may refer disputed items to arbitration by Arthur Anderson or
such other accounting firm mutually acceptable to the parties (the
"Arbitrator") by giving written notice to the Arbitrator and the other
party.
(b) Seller and Buyer shall each submit a report to the Arbitrator indicating
a proposed amount of the disputed item within five (5) days after the
date of the notice set forth in clause (a) above. If either party fails to
submit a report within such period of time, the other party's report will
be automatically adopted by the Arbitrator.
(c) The Arbitrator shall select the report which is closer to the
Arbitrator's independent determination of the disputed item within
fourteen (14) days after the submission of the reports. The Arbitrator's
shall not make any modifications to the report(s) submitted by the
parties, but shall select one of the reports as is.
(d) The parties shall be bound by, and shall be deemed to have accepted, the
report selected by the Arbitrator.
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6. Following the Closing Date, the parties shall, as promptly as
practicable, perform in all material respects any and all of their respective
obligations under the Business Transfer Agreement that have not been
performed prior to the Closing Date, including without limitation, the
following:
(a) Seller shall use its Best Efforts to transfer to Buyer within 7 days
after the Closing, all the security interests and guarantee arrangements
which secure and guarantee obligations (that are included in the Conveyed
Assets) of certain distributors to the Business listed on Exhibit 6(a) to
this Agreement;
(b) Seller shall use its Best Efforts to assign to Buyer within 7 days after
the Closing, all the contracts listed on Exhibit 6(b) to this Agreement;
(c) Seller shall use its Best Efforts to assign to Buyer within 7 days after
the Closing, all the foreign patents listed on Attachment A-1 to Schedule
3.5(a) of the Business Transfer Agreement;
(d) Seller shall convey a limited co-ownership interest to Buyer within 7
days after the Closing, in all the patents listed on Schedule 3.5(a-1) to
the Business Transfer Agreement;
(e) Seller shall assign to Buyer within 7 days after the Closing, all the
permits and licenses listed on Exhibit 6(e) to this Agreement; and
(f) Seller shall provide assurances relating to subcontractors as set forth
in Section 5.25 of the Business Transfer Agreement.
Exhibits 6(a), 6(b) and 6(e) are attached for information purposes only and
Seller makes no representation as to the accuracy of the information
presented therein.
7. Seller shall, subject to the indemnification provisions under the
Business Transfer Agreement, indemnify and hold harmless Buyer and its
officers, directors, employees and affiliates from any claims, actions,
damages or costs that arise from or in connection with any building or other
structure on the real property included in the Conveyed Assets that is not
registered on the factory registration certificate of the Business, but that
should have been so registered.
<PAGE>
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8. The completed and agreed upon schedules to the Business Transfer
Agreement are attached as Exhibit 8 to this Agreement.
9. Notwithstanding the last sentence of Section 5.13(a) of the Business
Transfer Agreement, nothing in the Business Transfer Agreement shall prohibit
or limit the ability of Seller and its Affiliates to perform their respective
obligations under the foundry services agreement, dated June 21, 1995, with
IXYS Corporation, as amended on March 28, 1996 and March 13, 1998, for the
current term of that agreement and until the expiration of the non-compete
period under the Business Transfer Agreement.
10. At the Closing, Seller shall cause its overseas Affiliates to transfer to
Buyer full ownership to all Business Product inventories owned by them at no
additional cost or expense to Buyer.
11. Notwithstanding anything to the contrary contained in the Business
Transfer Agreement, Buyer shall not be obligated to pay any VAT to Seller
until May 24, 1999. If the Korean tax authorities deny Buyer's ability to
obtain a refund or credit of the VAT paid due to the Transfer Date in the
Business Transfer Agreement being December 31, 1998, then Seller shall
reimburse Buyer for the full amount of the VAT paid within fifteen (15) days
of receiving from Buyer a written confirmation that the refund or credit of
the VAT paid has been denied.
12. Fairchild and Buyer hereby jointly and severally represent and warrant
that the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate proceedings on the part of Fairchild and Buyer.
13. Seller shall not exercise control over the Employee Welfare Fund of the
Business. Samsung shall tender to Buyer the bank passbook and chop of the
fund and any other documents related thereto in its possession within 7 days
after the date of Closing.
14. The parties agree that attached hereto as Exhibit 14 is a list setting
forth certain assembly and test equipment owned by Seller on the Closing Date
but held by certain subcontractors. Such equipment held by Daesan Electric
and STS will not be transferred to Buyer and shall not be included in the
Conveyed Assets and shall be included in the Excluded Assets. All other
equipment on Exhibit 14 hereto will be transferred to Buyer as part of the
Conveyed Assets. Seller and Buyer agree not to change in any material respect
any of the terms of the present
<PAGE>
- 6 -
consignment arrangement (including location, use or any lease payments) on
the mixed use equipment without the consent of the other.
15. Except as otherwise provided herein and except to the extent that the
terms of this Agreement conflict with those of the Business Transfer
Agreement, all of the terms and conditions of the Business Transfer Agreement
shall apply to this Agreement and shall remain unchanged and in full force
and effect.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed on their behalf as of the date first written above.
Samsung Electronics Co., Ltd. Fairchild Korea
Semiconductor Ltd.
By: By:
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Title: Title:
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Fairchild Semiconductor Corporation
By:
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Title:
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